What Is After-Hours Trading and How Does It Work?
After-hours trading refers to the buying and selling of stocks outside of regular market hours, which typically run from 9:30 a.m. to 4:00 p.m. Eastern Time.
This extended session usually takes place between 4:00 p.m. and 8:00 p.m. ET and is facilitated through electronic communication networks (ECNs), allowing investors to trade directly with one another.
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How Does It Work: Example
For example, if a company releases its earnings report at 4:15 p.m., traders can immediately react and place orders based on the news—without waiting until the next trading day.
However, unlike during regular hours, after-hours trades often experience lower liquidity and wider bid-ask spreads.
Can You Actually Buy And Sell In After-Hours Trading?
Yes, you can both buy and sell stocks in after-hours trading, provided your brokerage supports it and the stock is actively traded.
Many major platforms, such as E*TRADE, Schwab, and Robinhood, offer after-hours access, although the hours and rules vary.
For instance, if you're tracking Apple stock and notice strong earnings released at 4:10 p.m., you could place a buy order through your trading app at 4:20 p.m.
If another investor wants to sell at your price, your trade may go through. But there’s no guarantee of execution because fewer people are trading.
Risks and Benefits of After-Hours Trading
After-hours trading offers unique opportunities, but it also introduces higher risk due to lower volume and greater volatility.
Pros | Cons |
|---|---|
Trade on news immediately | Low liquidity can delay execution |
More flexible trading hours | Wide bid-ask spreads |
Potential for better pricing | High volatility and price swings |
Helpful for time-restricted users | Limited broker access or tools |
Useful for short-term strategies | No guarantee your trade gets filled |
- React Quickly to News
You can trade right after earnings releases or major announcements instead of waiting until the market opens.
For example, investors often rush to buy or sell based on a CEO resignation after 4:00 p.m.
- Convenience for Busy Investors
People with 9–5 jobs can place trades after work, making it easier to stay active in the market without altering their daily schedule.
- Potential for Better Pricing
Occasionally, lower competition can mean better prices if you time it well—especially if others haven't digested breaking news yet.
- Short-Term Trading Strategies
Some traders use after-hours moves to set up positions for the next day, capitalizing on overnight momentum.
- Lower Liquidity
Fewer participants mean it might take longer to find a match for your trade, especially in smaller or less popular stocks.
- Wider Bid-Ask Spreads
Prices may fluctuate sharply, and the spread between what buyers want to pay and sellers want to receive is often larger.
- No Guarantee of Execution
Even if you place a trade, it may not go through unless someone agrees to your price, leaving your strategy incomplete.
- Greater Volatility
After-hours markets can overreact to news with larger price swings, which may not reflect the true direction of the stock.
- Limited Broker Access
Not all brokers support full after-hours trading windows or every stock, reducing your available opportunities.
Which Platforms Allow After-Hours Trading?
Several online brokers offer access to after-hours and pre-market sessions, though available times and order types may vary by platform.
Fidelity: Supports after-hours trading from 4:00 to 8:00 p.m. and pre-market from 7:00 to 9:28 a.m. Orders must be placed as limit orders for execution.
E*TRADE: Offers trading from 7:00 a.m. to 8:00 p.m. ET. Their Power E*TRADE platform gives advanced traders tools for extended-hours strategies.
Robinhood: Provides extended hours from 7:00 a.m. to 8:00 p.m. on weekdays. This appeals to casual investors wanting to act on late-breaking news.
Charles Schwab: Enables trading from 7:00 a.m. to 8:00 p.m., supporting both pre-market and after-market sessions. Great for those tracking global events overnight.
Each platform may differ in fees, available securities, or tools.
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How to Trade Stocks in the Pre-Market and After Hours
Trading stocks outside of normal hours requires a slightly different approach than regular session trading.
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Use Limit Orders Instead of Market Orders
Because of wider bid-ask spreads, it's safer to set a maximum price you're willing to pay or a minimum to sell.
For example, instead of buying Tesla at “market price,” place a limit order at $850 to avoid unexpected execution at $860.
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Check Broker Support and Hours
Each platform has its own extended-hours policy.
If you're on E*TRADE, for instance, you can place trades as early as 7:00 a.m., but that wouldn't work on platforms that begin at 8:00 a.m.
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Focus on News-Driven Opportunities
Earnings, mergers, or economic reports often create sharp moves in extended sessions.
If Meta announces job cuts at 5:00 p.m., a savvy trader might sell shares before the news hits wider markets.
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Be Prepared for Low Liquidity and Volatility
Expect fewer participants, which leads to more erratic price movement.
In one example, Netflix dropped 8% in after-hours following disappointing guidance—moves like that are common in low-volume sessions.
FAQ
They can. If there’s significant activity or news, after-hours price movement often influences the next day’s opening price, especially in high-volume stocks.
Not all stocks have after-hours liquidity. Smaller or less actively traded stocks may show no volume at all, meaning no one is buying or selling.
Yes, after-hours trades are publicly reported and appear in charts and quote systems. However, volume may update less frequently than during normal hours.
Most platforms do not support stop-loss orders in extended sessions. You’ll likely need to use limit orders instead to control risk.
Yes, it’s regulated by the SEC and FINRA, just like regular market hours. However, some protections like fair pricing rules may be less effective due to thin trading.
Low liquidity, breaking news, and emotional reactions to events like earnings reports can all lead to larger price swings than usual.
Yes, if a stock split is announced or takes effect after hours, prices will adjust accordingly in the extended session.
Yes, as long as the order hasn’t executed, you can usually cancel or adjust it through your trading platform—just like during regular hours.
Prices are often shown in real-time but may reflect delayed volume updates. Always check if your broker offers real-time quotes for extended hours.
No, mutual funds trade only once per day at the NAV price after the market closes. They cannot be bought or sold in after-hours sessions.