How to Buy Stocks After Hours
The regular North American trading hours are from 9:30 a.m. to 4 p.m. Eastern time, Monday through Friday. Trading outside of this window is after-hours or extended-hours trading, which usually takes place from 7 a.m. to 9:28 a.m. and from 4 p.m. to 8 p.m. Eastern time. After-hours trading can be risky because of light volumes and price fluctuations. However, it gives you flexibility because you can react quickly to news events developing after the markets close or before they open.
Review the fundamentals because buying a stock after-hours is the same as buying it in the regular trading session. For example, if a company has reported stronger-than-expected earnings after the closing bell, buying the stock in the after-hours session might make sense because the price could trend higher in the near term. However, exercise caution if there is an unsubstantiated rumor of an impending takeover. Verify the source and authenticity of the takeover offer before buying the stock in the regular or extended session.Step 2
Read your broker's procedures for placing orders in the after-hours session. For example, you may have to specify a specific electronic communications network for your trade or you may have to place orders over the phone with a live agent. Your broker may allow only limit orders in after-hours trading. Limit orders execute only at your specified price or better. You may not be able to add all-or-none or other conditions on your order. With all-or-none orders, the entire order fills at the limit price or the order expires.Step 3
Place the buy order, specifying the quantity and the price. Even if your broker allows market orders in the after-hours trading, you should place limit orders to guarantee fills at your preferred price. Volatility and thin trading could result in fills at unfavorable prices. Your broker may allow you to place orders during the regular trading session that remain valid through the after-hours trading session of the same day.Step 4
Monitor your order. If your broker requires you to place after-hours orders over the phone, you may only be able to monitor and change your order by phone. There may be delays in getting information, such as price quotes, order status and trade executions.
- Closing price has an impact on margin calculations. It is usually the last price at which a stock trades during the regular market session. However, some data providers and brokers may use the last trade during the after-hours session. This could lead to confusion because one unusual trade in the after-hours session could change your portfolio value.
- You may not get your order filled because of low volumes in the after-hours sessions. In addition, higher bid-ask spreads -- differences between what sellers are asking and what buyers are offering -- could make it difficult to get favorable prices for your order.
Based in Ottawa, Canada, Chirantan Basu has been writing since 1995. His work has appeared in various publications and he has performed financial editing at a Wall Street firm. Basu holds a Bachelor of Engineering from Memorial University of Newfoundland, a Master of Business Administration from the University of Ottawa and holds the Canadian Investment Manager designation from the Canadian Securities Institute.