After-hours trading AHT refers to the buying and selling of securities on major exchanges after the specified regular trading hours. Buy and sell orders in the AHT session can be entered and executed anytime between 4: At one time limited to institutional investors and individual investors with high net worth , AHT is now an option for the average investor as well.
The emergence of electronic communication networks ECNs ushered in a new era in stock trading. An ECN is an interface that not only allows individual investors to interact electronically, but also lets large institutional investors interact anonymously, thereby hiding their actions.
The development of AHT offers investors the possibility of great gains, but you should also be aware of some of its inherent risks and dangers:. At the end of the trading session at 8: We've covered the risks of AHT, but you should also be aware of the benefits. Having the ability to trade around the clock allows you to react quickly to breaking news stories or fresh information before market open the next day.
Furthermore, although volatility is a risk associated with trading after hours, you may find some appealing prices during this time. AHT has developed to the point where all interested investors, big or small, have an opportunity to do business outside of standard hours.
Just remember that while there are benefits to participating in AHT, you should also be mindful of the risks. Dictionary Term Of The Day. Broker Reviews Find the best broker for your trading or investing needs See Reviews. Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education.
A celebration of the most influential advisors and their contributions to critical conversations on finance. Become a day trader. What is after-hours trading? Am I able to trade at this time? By Investopedia Staff Updated April 10, — 2: The development of AHT offers investors the possibility of great gains, but you should also be aware of some of its inherent risks and dangers: Less liquidity - There are far more buyers and sellers during regular hours. During AHT there may be less trading volume for your stock, and it may be harder to convert shares to cash.
Wide spreads — A lower volume in trading may result in a wide spread between bid and ask prices. Therefore, it may be hard for an individual to have his or her order executed at a favorable price. Small fish — While individual investors now have the opportunity to trade in an after-hours market, the reality is that they must compete against large institutional investors that have access to more resources than the average individual investor. Volatility — The AHT market is thinly traded in comparison to regular-hours trading.
Therefore, you are more likely to experience severe price fluctuations in AHT than trading during regular hours. Learn more about order types and why entering limit orders to buy a security may help to mitigate the impact of wide bid-ask Learn about the difference between the primary market and the secondary market, and what types of assets are traded on secondary Learn the difference between a market order and a limit order, and why a trader placing a limit order pays higher fees than After-hours trading may have benefits for traders, but there are some potential problems.
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A period of trading activity that occurs before the regular market How much a fixed asset is worth at the end of its lease, or at the end of its useful life. If you lease a car for three years, A target hash is a number that a hashed block header must be less than or equal to in order for a new block to be awarded. Payout ratio is the proportion of earnings paid out as dividends to shareholders, typically expressed as a percentage.
The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as Get Free Newsletters Newsletters.More...