Do you find yourself fretting over prices after the market closes on names you have or are looking at?
How anxious are you when the stock or option you bought plunges after posting earnings results? The movements can really get the emotions juiced up —but is it really necessary?
ILLIQUID CONDITIONS
The trading that occurs during the ‘after hours’ session is usually thin (low volume) and loaded with price manipulation. There is nary a bid/ask during these sessions and those claiming an advantage really have no business trading during this time. After all, the true action is during real time hours (RTH). It is during this regular session where the best price discovery is seen, the best liquidity and the true action of the stock.
PRICELINE ACTION
I recall a year or so ago after Priceline earnings hit, the stock sank in the afterhours, down probably 20 points or more and closed that session in the red. The next morning the stock opened up flat and finished higher by 30 points! Imagine how you would have felt if you sold during the afterhours session! Sick to your stomach.
DON’T WASTE YOUR TIME
After hours trading is often a complete panic. Wait for the real trading session to start, and you will often find the pricing and trading is much easier and smoother.
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Bob Lang has a newly re-launched website at www.explosiveoptions.net, where he manages subscribers, writes a newsletter, hosts webinars and has just opened a brand new chat room.
