After-Hours Trading





Trading that takes place on electronic market exchanges after the regular trading hours at stock market have ended are called as after-hours trading. It starts at 4 pm U.S. Eastern Time soon after the major U.S. stock exchange closes. It could even run as late as 8 in the night though the volume would typically thin out much earlier in the session. Electronic Communication Networks (ECNs) are used to conduct trading in after-hours.
The mechanics of after-hours trading involves the spark, which is something used by traders or investors if news breaks after stock exchange closes. Release of earnings may prompt an investor to buy or sell a stock. The second mechanics is volume which may spike on the initial release of the news but mostly thins out as time progresses. Generally, the volume amount declines by 6 pm.
Price being another mechanic, it usually comes at a premium in the after-hours trading. And finally, participation – if liquidity and prices are not a reason to quote after-hours trading as risky, then the lack of participants makes it even more riskier.

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