How to trade after hours

What is after-hours trading?

After-hours trading (sometimes called extended-hours trading) and overnight trading refers to buying and selling stocks outside regular US market hours. While exact schedules vary by venue and broker, a common framework for US-listed stocks is:

• Pre-market trading: 4:00 a.m. to 9:30 a.m. ET
• Regular trading: 9:30 a.m. to 4:00 p.m. ET
• After-hours trading: 4:00 p.m. to 8:00 p.m. ET
• Overnight trading: 8:00 p.m. to 4:00 a.m. the next day ET.

After-hours (including overnight trading) trades are generally executed electronically through Alternative Trading Systems (ATSs) and Electronic Communication Networks (ECNs). These are electronic venues that match buy and sell orders outside the main session.

Why does after-hours trading exist?

Many companies release earnings results, guidance updates and other market-moving announcements after the closing bell. After-hours sessions give market participants a way to react without waiting for the next day’s open.

Extended hours can also help investors who can’t trade during the workday or those who want to adjust positions when global news breaks outside US daytime hours.

Flexibility is the main benefit, but it’s also paired with conditions that can make prices less stable than during core hours. Read more about benefits, risks and limitations later in this article.

How after-hours trading works

To trade stocks after hours, you typically need a brokerage account that supports extended-hours sessions. If your broker offers it, you’ll usually see an option to enable extended-hours trading and agree to additional disclosures.

Most brokers typically restrict extended-hours orders to limit orders. This order type lets you set the maximum price you’re willing to pay to buy or the minimum price you are willing to accept to sell. This can help reduce the chance of a surprise fill at an unfavorable price.

Even with a limit order, execution isn’t guaranteed. If there isn’t enough liquidity (meaning not enough buyers and sellers at your chosen price), your order may only fill partially or not at all.

Prices can also differ between venues in extended hours because markets may not be fully linked. That means the quote you see on one venue may not match the best available quote somewhere else.

Illustrative example

Let’s say a company you’re interested in releases its earnings at 4:05 p.m. ET and the stock starts moving in after-hours trading. Instead of waiting for the next day’s open, you can place a limit order during the after-hours session (e.g., buy 10 shares if the price is $X or lower).

Because fewer participants are trading, prices may move faster and spreads may be wider. So, one of three things could happen – your order could fill at your limit, fill partially or not fill at all. The after-hours price may also differ from the next day’s opening price.

Potential benefits of trading after hours

• Reacting to news sooner: You can respond to earnings releases or major headlines that land after the market closes.
• More flexibility: Investors with busy daytime schedules may prefer trading windows outside core hours.
• Potential price opportunities: Because fewer participants are active, prices can move more sharply, which may create opportunities for certain trading strategies.

Always remember, these potential benefits aren’t guaranteed. In extended hours, the same price movement that creates opportunity can also increase the risk of getting filled at a price you didn’t expect.

Risks and limitations of after-hours trading

• Lower liquidity: With fewer market participants, it may be harder to enter or exit a position quickly.
• Wider bid-ask spreads: The ‘bid’ is what buyers are offering; the ‘ask’ is what sellers want. Wider spreads can increase trading costs.
• Higher volatility: Prices can swing more sharply, even on relatively small order flow.
• Less certain prices: Extended-hours prices may not match the regular session’s closing price or the next day’s opening price.
• Different order handling: Some protections and routing practices that apply during core hours may not apply in the same way in extended hours.
• Market data limitations: Quotes and consolidated trade data may be more limited or delayed compared to the regular session.
• News announcements: Important financial announcements are frequently made outside of regular trading hours. In extended hours trading, these announcements may occur during trading and, if combined with lower liquidity and higher volatility, could cause an exaggerated move in stocks.

How to start trading after hours

1. Confirm your broker supports extended hours. Not all brokers offer it, and the schedule can vary by trading venue.
2. Review the broker’s extended-hours rules. Pay attention to eligible order types, which stocks are available and whether unfilled orders carry over.
3. Use limit orders. Limit orders are commonly required in extended hours and they can help you define your acceptable price.
4. Check liquidity and spreads before placing an order. If spreads are wide or quotes are thin, execution may be less predictable.
5. Monitor your open orders. Because execution isn’t guaranteed, you may need to adjust or cancel orders based on market conditions and your broker’s rules.

Trading after hours with Crypto.com Stocks

Crypto.com Stocks offers 24/5 US stock trading, which includes:

• Pre-market: 4:00 a.m. to 9:30 a.m. ET
• Core hours: 9:30 a.m. to 4:00 p.m. ET
• After-hours: 4:00 p.m. to 8:00 p.m. ET
• Overnight: 8:00 p.m. to 4:00 a.m. ET

Remember, outside core hours, trading is done using limit orders. Market orders and fractional shares are generally limited to our core hours.

After-hours vs. regular trading: Key differences

Get started with Crypto.com Stocks

1. Download the Crypto.com App and open a Crypto.com Stocks account.
2. Complete sign-up and verification, then fund your account.
3. Explore stock trading features like fractional shares and 0% commission trading.
4. Learn more about stock trading using our dedicated Learn Hub.

This is informational content sponsored by Crypto.com and should not be considered as investment advice.

Foris Capital US LLC (“FCUL” or referred to herein as “Crypto.com Stocks”) is a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC) and a Member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC). For further information about FCUL, please visit FINRA BrokerCheck.  

FCUL is a subsidiary of Crypto.com. FCUL is a separate entity from Crypto.com, Foris DAX, Inc., and other affiliated Foris companies. FCUL does not engage in the sale, transfer or custody of crypto currencies or digital assets. Crypto.com is a separate entity from FCUL and does not engage in the securities business. Customer balances and crypto holdings held and transacted at Crypto.com and other entities outside of FCUL are not covered by SIPC insurance and are separate from securities transactions and holdings at FCUL.

Fractional shares are not available for all equities.

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