After Hours Trading Explained

After hours trading

What is after hours trading? Let’s talk about it. What is it, should you do it and do you need it?

You see, people think that they need to trade after hours because they don’t have the time to trade throughout the day. And that is dead wrong.

But first, let’s talk about what after hours trading is.

What is after hours trading?

what is after hours trading

First of all, the exchanges are open from 9:30 in the morning, and this Eastern, New York Time, from 9:30 – 4:00 o’clock.

This is when most of the trading takes place.

But then, after the exchanges close, there is some other trading going on and this is by electronic exchanges, right?

You can place orders, and they will be executed if you specify that you do want to trade during after-hours.

What are the pros and cons of trading after hours? Should you do this?

First of all, let me address a myth.

In order to trade, the markets do not have to be open.

In fact, my favorite way to trade is to analyze the stocks while the markets are closed and then place an order.

When you place an order, and you don’t specify that you want to trade after hours…

Here’s what will happen.

If I place an order right now as the exchanges are closed, it will be executed tomorrow after the exchanges open.

So, that’s the cool thing, and this is what you need to understand: in order to trade, the markets do not have to be open.

Whether you place an entry order or exit orders, like a stop loss and profit target, you can do it in the evening.

Why do after hours exist?

Well, because trading is addictive.

There are two main reasons why after our trading exists.

First, for the trading junkies. There are really some people who after dinner sit down in front of the computer and they try to trade overnight.

Now, here’s the challenge.

Overnight, there are not many participants. Again, most participants are trading between 9:30am eastern time and 4:00pm in the afternoon, Eastern time.

So, during the night, there’s not much going on, but some people think, “Well, I’ll just trade after dinner.”

It doesn’t work this way.

I mean, really, stay away from this.

What is the other reason why there are after hours?

Well, as you know, sometimes companies report earnings after hours, right?

If you have big companies like Netflix, or Apple, or Facebook reporting earnings, what they call “after the bell,” this is when markets can be whipsawed around.

This is where large institutional traders sometimes try to take advantage of these moves.

Now, this is where you’re trying to swim with the sharks, and trust me, most people who try to swim with the sharks are being eaten alive by the sharks. Don’t do this, right?

Based on my experience, trading after hours is extremely dangerous.

It is very illiquid. And it will be very frustrating for you. Just stick to the regular times.

The cool thing is, if you don’t specify with your broker specifically when you place the order that you want to trade these ETH (extended trading hours), it means that your order is held until the exchanges are open again. And then you place it.

Let’s talk about earnings

The way I personally like to trade stocks, I stay away from earnings. I pick stocks that are not reacting to earnings.

And in order to do this is, whenever I find a stock that I want to trade, I first look for gaps.

When I see gaps on the chart, I’m staying away from this stock.

Because what do gaps mean?

It means that right now this stock is very receptive to either earnings or any other news.

By the way, if you would like to know how I personally trade go to mytradingroutine.com.

This is where I have a quick video for you that shows you exactly what I’m looking for before I decide to trade a stock.

What criteria do I want to see?

One, I want to see that three indicators are pointing in the right direction.

Either up, in this case I want to buy a stock, or down, then I want to sell a stock.

The other two are trendability, and gappiness.

If you want to learn more about this, go to mytradingroutine.com.

This is where you’ll also see the software that I’m using, and if you would like to have a demo of the software, you can press the button right underneath.

Anyhow, going back to after hours. After hours, for most people, are not good.

In summary, stay away from this

I personally have tried to trade after hours. It has been really frustrating.

It’s very illiquid and this is not the way to make money.

Trade when everybody else is trading, you don’t need to be in front of the computers when the market is open.

After Hours Trading

This is the trading that is happening after the exchange is closed.

You don’t need this at all.

So was this helpful? If it is, leave a comment below.

If you know anybody who might find this helpful, please feel free to share it because sharing is caring right.

The more you spread the love the more we get people educated about trading. They’ll see that it can be simple and more people will start trading and see that it’s possible to make money.

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