What Is After Hours Trading? - Here's what you need to know... - Trading Basics

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After Hours Trading Explained: What is after-hours trading?

Time Stamp
0:00 Introduction
0:15 What is after hours trading?
2:00 Why does after-hours trading exist?
3:20 Cons of after-hours trading
4:35 Best way to learn how to trade
5:30 Conclusion- Should you trade after hours?




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?
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.
You can place orders, and they will be executed if you specify that you want to trade during after-hours.
What are the pros and cons of trading after hours?
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, it will be executed tomorrow after the exchanges 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?

There are two main reasons why after-hours 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. Most participants are trading between 9:30am eastern time and 4:00pm in the afternoon, Eastern time.

What is the other reason why there are after hours?

Well, as you know, sometimes companies report earnings after hours.
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.

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.

In summary, stay away from this
I personally have tried to trade after hours. It has been really frustrating.

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


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