What is Pre-Market Trading and Post-Hours Trading?

The stock market, or technically speaking, the U.S. stock market exchanges–particularly the New York Stock Exchange (NYSE) and the Nasdaq–are, typically, open between 9:30 a.m. and 4 p.m. Eastern Time (ET). With the advent of new technologies and an growing demands for trading the hours of operation are now extended to include pre-market and post-hours Trading.

Many of the most significant market events can happen without NYSE and Nasdaq’s standard trading sessions.

Pre-Market and After-Hours Trading on the NYSE and the Nasdaq

Key Takeaway

  • The growth of trading platforms that use electronic technology and an effort to remain competitive led the most significant U.S. stock exchanges to allow Trading both before and after the normal market hours of 9:15 a.m. until 4 p.m. ET at the beginning of the 1990s.
  • Pre-market trading usually takes place in the hours between a.m. until 9:30 a.m. However, it can start at 4 a.m. ET.
  • After-hours Trading is available from 4:00 p.m. and may continue till 8 p.m. ET.
  • The term is commonly used to refer to prolonged trading hours before, and after-hours are associated with many risks: lack of liquidity, price volatility, and a low number of participants.
  • After-hours and pre-market Trading is exclusively conducted via the electronic communications network (ECNs).

Where can I find Off-Hours-Market Data?

The first place to seek out information about activities that occur after hours and before market is the data of their brokerage account service, if they have one. Information services for brokerage accounts typically provide the most comprehensive off-hours trading information, and they usually are free when you have an account with a brokerage. Investors are often able to trade outside of this timeframe, but also view prices for the current bid or asking prices for specific securities as well as the changes in prices when about the previous date’s close.

In the event that you do not have a brokerage account, or your broker does not offer the service you need, there are many free websites that provide users with access to after-hours and pre-market information. The Nasdaq website has detailed quotes for shares that are that are listed on Nasdaq website, which includes every trade as well as the price, date and the size of transactions executed during off-hours trading.

Extended hours Overview

Schwab offers and handles extended hours-of-operation orders using a prominent Electronic Market (either an Electronic Communications Network or an Electronic Stock Exchange). The Electronic Market may have relationships with other Electronic Markets that participate in an extended trading network in order to allow access to prices or charges offered by these other Electronic Markets.

Separate trading session–Schwab’s Extended Hours Trading offering includes two parts, the Pre-Market Trading session and the After Hours Trading session. They are totally separate from the normal trading session. Extended hours orders need to be submitted to the specially designed Extended Hours Trading screens at schwab.com and by calling 800-435-4000 and asking for an Extended Hours Trading representative.

Commissions and Trade Settlement–Commissions for extended hours trading are based on Schwab’s standard fee and commission schedule. Be aware that commissions on trades executed over several sessions (i.e. pre-market, standard, or after hours) are not consolidated. Extended hours trades typically be settled two business days after the order is executed, the same as orders made during normal market hours.

Standard Market in comparison to. extended hours sessions

Market standard

Orders can be made anytime and can be processed only between 9:00 a.m. and 4:00 p.m. ET. 1

Trading is mostly conducted through exchanges (NYSE Euronext, AMEX, and other regionals) as well as on NASDAQ via various venues, including market makers as well as ECNs.

There are many types of orders and restrictions that are accepted, including: market, limit, stop-limit, all-or-none, etc.

Different time limitations are offered. For example, Days, GTC, IOC and FOK

Extended hours

Pre-Market Orders are made between the hours of 8:05 p.m. (the previous trading day) between 9:25 a.m. ET. These orders will be eligible to be executed between 7:25 a.m. between 9:25 a.m. ET.

After-hours orders can be made and accepted for delivery anytime between 4:00 p.m. until 8:05 p.m. ET.

The trading process is conducted through a major Electronic Market

Limit orders only for specific Extended Hours session are accepted.

What exactly is what is an Electronic Market?

The term “electronic market” refers to an Electronic Market (either an Electronic Communications Network or an Electronic Stock Exchange) is an automated trading market or trading network that is that is used to show and perform limited orders. Professional traders, for instance, traders who trade for large financial institutions have been making use of Electronic Markets for over 15 years.

What’s the procedure?

An Electronic Market is simply a matching service that is set up to match sell and buy orders. For example, when there aren’t any sell orders for a specific stock listed on Electronic Markets, an investor who makes an order to purchase that stock will have to wait for a match selling order to be received before the order execution is completed.

What did you get?

Sellers and buyers trading on an Electronic Markets might experience significant delays before they can complete their orders, and some orders may not be completed in any way.

Due to the lack of trading activity during more extended hours of operation, the variance in the spread between purchase and sale orders is most likely to be larger than during normal market hours. The greater feeds can lead to higher volatility in prices. However, remember that when you make an extended-hours limit order, even though it is not a guarantee that your order will be fulfilled, however, you can be sure of the price of your limit order when your order is fulfilled.

Order Routing

For extended hours, the orders are routed to the Electronic Market. The Electronic Market may have the capability to fulfill specific orders from different Electronic Markets and may attempt to do this if your order through an alternative Electronic Market is to your advantage.

Extra Hours Quotations

You can request an extended hours quote from the client center by one or both ways. you are using the quick quote feature located in the upper right corner of the display or via the Research tab. In either case, you must enter an image of your security you’d like an extended hour quote, then an “.e”. “.e” is the extended hours designation “.e” represents the extended hours code. To get an extended hours quote for the symbol “ABCD,” you’d enter “ABCD.e”.

A standard hourly quote as opposed to. The extended hour quote–While an extended hour session is being held, you can get an estimate from the regular market session. Request a quote by adding the “.e” to get an ordinary market quote.

Reading an extended hour quote–An extended hours quote differs from a normal market quote. A major distinction is that there is at present no exact trade volume for Trading during extended hours. Extended hours quotes are based on the most accurate bid and asking orders that are currently available.

Follow the information below to assist you in reading an extended-hours quote:

“Previous Close” is the price at which the security closed in the last standard session on the market that is the main one on which this security is traded.

“Bid” refers to the most expensive price someone would be willing to pay for an asset.

“Size” refers to the term used by the market to define the amount of shares quoted at a specific price.

“Ask” refers to the most affordable price a person would be willing to sell securities. “Quote time/date” is the date at which it was revised.

If the bid is not displayed or request shows “N/A,” it means that there’s currently an unfilled buy (bid) or sell (ask) order on the market.

Extended hours quotes–Before making an order in an extended hour session make sure you check for the quote that is extended of that security. When the market is open quotes and last sales reports are combined. The quotes for Extended Hours and final sales reports are not combined over every Electronic Markets. Extended hours prices and quotes are the most competitive prices that are available only on Electronic Markets that may be part of the Extended Hours Trading Network. Extended Hours Trading Network. Prices and quotes for last sale can vary significantly between the one Electronic Market to another.

Important Considerations

Extended hours trading could have a limited amount of trading activity relative to the normal market’s movement. This can make it more difficult to secure execution of orders, and can be associated with other risks like the ones below:

Quotes–During normal market hours quotes and the last sales reports are combined. Extended hours, quotes and sales reports do not get combined throughout the entire Electronic Markets. Extended hours prices and quotes will reflect the highest prices at the time only via Electronic Markets that may be part of Extended Hours Trading Network. Extended Hours Trading Network. Prices for quotes and last sale can vary significantly between Electronic Market and another.

Pricing–Due to the lack of trading activity Stocks may see greater spreads and price fluctuations in Extended Hours than regular market hours.

The prices for the next day’s opening–In the process of investing you might have noticed that the price at which you open a the stock is not always in line with that of the store during the previous Trading session. Investors place market orders for execution in the next trading session must be aware of a variety of variables that can affect pricing of the stock from the time of market close and when it opens:

Companies that are publicly traded typically delay until after the market closes after 4:00 p.m. ET to announce important announcements, such as earnings reports. These announcements may and frequently will affect Trading during extended hours as well as the opening prices for the following day.

Orders that are placed after major exchanges have ceased Trading overnight and are reviewed by market makers and specialists prior to the market opening the next day. The amount of demand and supply indicated by the orders is one of the variables used by market makers in determining the starting price of the stock.

Investors who are professional (brokers as well as institutional investors) are trading during the extended hours for a number of years. Their trading activities during extended hours (based on announcements of news as well as their own research and other aspects) could also affect the price at which a stock opens. stock.

Individual investors will begin trading during the late hours trading, their activity can also impact on the opening price.

Liquidity–Lower trading activity could mean a less likely of your order being fulfilled. Additionally, there could be several orders in front of yours that will be filled with matching orders prior to your order is filled. It’s possible that your order won’t be completed completely, or even partially executed. Orders that are not executed will be cancelled after the specific Extended Hours Trading session.

Competition–Many traders who work extended hours are professionals working with large organizations and have access to more up-to-date information than individuals.

News–News news stories published following the closing of markets could cause large price variations during Trading during extended hours. Schwab suggests that you read the news at schwab.com and other news sites prior to Trading during extended hour sessions.

Multiple Account Holders/Power of Attorney–For accounts with multiple holders as well as customers that have given powers of attorney (POA) for account: In the event that an account holder or individual(s) who they have given POA are looking to trade during extended hours You should consider the pros and cons of Trading extended hours with one another prior to participating in the Schwab Extended Hours sessions. For more information, check at the Customer Center under the section on Agreements or contact the number 800-435-4000 to obtain a copy of the Extended Hours Trading Disclosure Agreement.

Risk of Incomplete calculation or dissemination of the The Index Value of the Underlying (or Intraday Indicative Value (“IIV”)–For certain Derivative Securities Products, the most recent index value or IIV is not determined or disseminated to the public during prolonged trading times. Because the index value and IIV aren’t determined or widely distributed in the post-market and pre-market sessions, investors who are not able to calculate implied value for specific Derivative Securities Products during these sessions could be at an advantage to market experts.

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