Where and how are “after-market” trades occurring? I note the market closes and for a few hours after that trades occur. Then no market action through the night, but a few
hours before the market opens, trades are occurring. The volume at these “fringes” is low, but not insignificant. The dramatic point is that sometimes 20% price movements occur.

Larry from LateNight


Larry, I love your question. Some of my best trades have come in the extended trading sessions. Here is how it works.

U.S. equity markets are always open Monday through Friday, 9:30 a.m. to 4 p.m. Eastern Time (ET), excluding market holidays. Equity options trade from 9:30 a.m. to 4:00 p.m. ET and Index options trade from 9:30 a.m. to 4:15 p.m. ET, excluding market holidays.

Extended-hours trading occurs on the NASDAQ, NYSE, and AMEX exchanges during a continuous 12-hour trading session from 8 a.m. to 8 p.m. ET, Monday through Friday, excluding market holidays. A.M. extended-hours orders (Ext. AM) can be placed at any time. The Ext.AM session is from 8:00 a.m. to 9:15 a.m. ET, Monday through Friday, excluding market holidays. The Ext. PM can be placed at any time; however, the session hours are from 4:15 p.m. to 8 p.m. ET, Monday through Friday, excluding market holidays.

Generally, the volume for extended trading is low, unless there is a piece of big news relating to a particular market. Otherwise, expect low volume. Low volume, however, does not mean no action. Sometimes, it is quite the opposite. I have yet to figure out why, but I have placed a sell order as much as 5% higher than the normal-day closing ask price and sold it in a flash. As well, I have bought equities at substantial discounts from the normal-day closing ask price. My guess is that more than a few novices trade extended sessions. If not that, then the traders in those extended hours know something about the markets that I do not know, and they are taking advantage. In any case, I recommend that you check out your broker’s program for extended trading, and if your broker supports it, give it a careful try.

Keep in mind, though, extended-hours trading is subject to unique rules and risks. Please review the extended-hours trading rules before you decide to participate.

Trade in the day; invest in your life …

Trader Ed