After-hours trading allows investors to buy and sell stocks after the regular U.S. stock market closes. A brokerage firm receives the order and routes it to an eligible exchange, alternative trading system or electronic communication network. The order executes only if another participant is willing to trade at an acceptable price.
In the United States, regular stock-market hours are 9:30 a.m. to 4:00 p.m. Eastern Time. After-hours trading commonly runs from 4:00 p.m. to 8:00 p.m. ET, although the exact hours, eligible securities and available order types depend on the brokerage firm and trading venue. Some platforms also offer overnight trading for selected stocks.
After-Hours Trading at a Glance
| Trading session | Typical U.S. Eastern Time | Main characteristic |
|---|---|---|
| Regular session | 9:30 a.m. to 4:00 p.m. | Highest participation and liquidity |
| After-hours session | 4:00 p.m. to 8:00 p.m. | Investors react to earnings and news released after the close |
| Overnight session | Varies by broker and venue | Available for selected securities on some platforms |
These times are typical rather than universal. A brokerage firm may offer shorter sessions, limit trading to certain securities or provide access through a particular venue.
How an After-Hours Trade Works
An after-hours trade follows the same basic path as a regular stock order: you choose an eligible security, submit an order through your broker, and wait for a matching buyer or seller.
1. You Select an Eligible Stock and Session
Your brokerage platform shows whether a stock can be traded after hours. A stock available during regular market hours may not be available during extended hours. Availability can also differ between stocks, exchange-traded funds and options.
2. You Place an Order Through Your Broker
You enter the ticker symbol, number of shares, order type and price. Many brokerage firms accept only limit orders during after-hours trading.
A limit order sets the highest price you will pay when buying or the lowest price you will accept when selling. The order will not execute unless the market reaches that price.
For example:
- You place a limit order to buy 100 shares at $50.
- The lowest available selling price is $50.40.
- Your order does not execute unless a seller offers shares at $50 or less.
- If only 40 shares are available at $50, you may receive a partial execution.
3. Your Broker Routes the Order
The brokerage firm sends the order to an eligible execution venue. That venue may be an exchange, an alternative trading system operated by a broker-dealer or an electronic communication network.
Electronic communication networks automatically match compatible buy and sell orders. Individual investors generally access these systems through their brokerage firms rather than connecting to them directly.
4. The Order May Execute, Partially Execute or Remain Unfilled
After-hours markets have fewer buyers and sellers than regular markets. Your order may:
- Execute completely
- Execute only partially
- Receive a less competitive price
- Remain unfilled
- Expire when the after-hours session ends
Your brokerage firm determines how long the order remains active and whether an unfilled order is canceled or carried into the next regular session.
Why Do Investors Trade After Hours?
Investors mainly use after-hours trading to respond to information released after the 4:00 p.m. close.
Companies often publish earnings reports, takeover announcements, regulatory filings and other material news outside regular market hours. After-hours trading gives investors a chance to react before the next regular session begins. It can also help people who cannot trade during the day because of their schedules.
For example, if a company reports weaker-than-expected earnings at 4:05 p.m., investors may submit sell orders immediately. The stock price could fall during the after-hours session before trading resumes the next morning.
What Are the Main Risks of After-Hours Trading?
The main risks are lower liquidity, wider bid-ask spreads, higher volatility, partial or failed execution and a large difference between the after-hours price and the next regular-session price.
| Risk | What it means |
|---|---|
| Lower liquidity | Fewer participants may be available to take the other side of your order |
| Wider bid-ask spreads | The gap between the buying price and selling price may be larger |
| Higher volatility | A small number of trades can move the displayed price sharply |
| Partial or no execution | Your order may not fill completely or may not fill at all |
| Unlinked markets | Prices may differ between after-hours trading venues |
| Uncertain opening price | The next regular-session price may be very different from the after-hours price |
| News risk | Earnings and company announcements can cause sudden price changes |
The SEC warns that some stocks may not trade at all during extended hours. FINRA also notes that lower liquidity can make it harder to receive a competitive execution price.
After-Hours Prices Do Not Set the Official Close
The 4:00 p.m. regular-session price remains the official closing price for that trading day. After-hours trading does not change the official close or guarantee the next day's opening price.
The next opening price is determined by supply and demand when the regular market opens. A stock trading at $90 after hours could open at $85, $95 or another price the next morning if new orders and information change market expectations.
After-Hours Markets Are Not Fully Consolidated
During regular trading hours, displayed quotes are consolidated into the National Best Bid and Offer, commonly called the NBBO. FINRA states that the NBBO is not published during extended hours, and after-hours venues are not linked in the same way.
The price shown by one trading venue may therefore be worse than the price available on another venue at the same time.
How to Place an After-Hours Trade More Carefully
Before submitting an order:
- Use a limit order when available. A limit order prevents execution above your maximum purchase price or below your minimum sale price.
- Check the exact trading session. Confirm whether your broker supports the 4:00 p.m. to 8:00 p.m. session or an overnight session.
- Confirm the order expiration. Find out whether an unfilled order will be canceled or carried into regular trading.
- Review the bid-ask spread. A wide spread can make execution more expensive.
- Check the available volume. Low volume increases the risk of a partial execution.
- Do not assume the after-hours price will hold. The regular market may open at a very different price.
- Check whether the product is eligible. Stock options generally have limited extended-hours availability, even when the underlying stock trades after hours.
Is After-Hours Trading Worth Using?
After-hours trading is most useful when you need to respond to time-sensitive news or cannot trade during regular market hours. It is less useful when immediate execution is not important, because regular trading generally offers more liquidity, tighter spreads and broader participation.
For most routine, long-term stock purchases, regular market hours are usually the simpler execution environment. After-hours trading is better treated as a specialized session where limit orders, wider spreads, partial fills and price gaps are normal possibilities. The exact rules depend on your brokerage firm, so review its extended-hours disclosure before placing a trade.