The stock market, or more specifically, the stock market exchanges in the United States—most notably the NYSE (New York Stock Exchange) and the Nasdaq—are typically open from 9:30 a.m. to 4:00 p.m. Eastern Time Monday through Friday. On the other hand, due to the introduction of innovative technology and the growing demand for trading, these hours have been extended to include pre-market and after-hours trading. Some of the most dramatic shifts in the market may take place outside of the typical trading hours of the New York Stock Exchange and the Nasdaq. So let us see what are the pre-market and after-hours trading on the nyse and the nasdaq.
Where to Find Market Data Outside of Business Hours
If an investor has a brokerage account, the data service is the first place they should look for information about pre-market and after-hours trading. Brokerage information services often have the most detailed information about how the market trades outside of business hours, and they are usually part of a brokerage account. During this time, investors can often not only trade but also check the current bid and ask prices for certain assets and see how prices have changed since the end of the previous session.
When you do not have a trading account and if your brokerage does not provide this option, you may still get free entry to after and pre-hours information via various sites. On the Nasdaq website, you can get full quotes for stocks listed on Nasdaq. This includes the price, time, and size of deals made during off-hours trading.
Use the pre-market quotes service to find out about trading before the market opens and the after-hours quotes service to find out about trading after the market has closed. Even though the NYSE's website doesn't have as much information as this one, its quotation service shows the most recent stock movements during the off-hours market. Other services, like Yahoo Finance, will show you the most recent pre-market and after-hours transactions. Typically, such services include all equities; regardless they trade on the Nasdaq, NYSE, or maybe another market.
Advantages
- Working professionals and people busy during regular trading hours will find pre-market and after-hours trading helpful because it lets them trade at other times.
- It lets traders trade in response to news like earnings reports outside regular trading hours.
- Traders can get ahead of the competition by placing orders ahead of the next day's schedule before and after market hours.
Disadvantages
- Before the market opens and after it closes, there is either no or very little liquidity, meaning no deal can be made with certainty.
- Since there aren't many people involved, trading before the market opens and after it closes is erratic and could cause prices to change.
- Not all stocks can be traded before the market opens or after it closes.
Pre-Marketing Hours
The pre-market is when people buy and sell things before the regular market opens. Even though its trading session usually takes place every trading day between 8 and 9:30 a.m. Many direct-access brokers allow pre-market trading to start as early as 4 a.m. But most stocks don't move much this morning unless there is news. The liquidity is also very low, and most stocks only show stub quotes. Even though pre-market trading gives investors a head start on how the market will react to the news, especially things that happen in Europe or the UK, the small volume may give investors a false idea of how strong or weak a stock is.
Most people who get up early don't start pre-market access until 8 a.m. ECNs (Electronic Communication Networks) like Bloomberg Tradebook, NYSE Arca, and Instinet are the only places where limited orders can be filled before the market opens.
The After Market Hours
In June 1991, the New York Stock Exchange added one hour to its trading hours to make room for trades that happened after the market closed. The decision was made because foreign exchanges in London and Tokyo, as well as private exchanges with longer trading hours, were becoming more of a threat. After-hours trading begins at 16:00. ET and may go on until 8 p.m. ET. However, most trading is done by 6:30 p.m. After-hours trading, like pre-market trading, is done via ECNs.
Traders or investors may do "after-hours trading" if news comes out after a stock exchange closes. Changes in share prices after the market closes are an excellent way to see how the market responds to new information. But after hours, price changes are more random than during the day: As in the pre-market, illiquidity and a lack of volume could be a worry. Institutional or large investors may choose not to trade after hours, no matter what news or events happen. Because of this, a stock can drop a lot after trading hours and then go up when regular trading resumes the next day.
