What Time Can I Start Trading Stocks – Exchanges on US stock exchanges – especially the New York Stock Exchange (NYSE) and Nasdaq – are usually open between 9:30 a.m. and 4:00 p.m. Eastern Time (ET). However, with the adoption of new technology and increased demand for trading, these hours have been extended to include what is known as pre-market and after-hours trading.
Because exchanges do not facilitate pre-market and after-hours trading, trading works differently. Exchanges are not involved, so electronic communication networks handle trades digitally.
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Before the market opens, traders can log into their brokerage accounts and look for opportunities to get ahead of the market, especially if reports are released during the trading day. Traders can then place orders through their brokers. Generally, these orders can only be limit orders, where traders place an order to buy or sell a certain amount of equity at a certain price.
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Brokers may also have specific criteria for trading before hours — for example, Schwab allows you to place limit orders between 8:05 p.m. ET (the previous trading day) and 9:25 a.m. ET for execution between 7:00 a.m. ET and 9:25 a.m. ET.
After-hours trading works like pre-market trading; a trader can log into their brokerage account and place limit orders for their brokers to execute. For example, Schwab’s after-hours trading allows you to place orders between 4:05 p.m. ET and 8:00 p.m. ET and executes the orders through the electronic market.
One issue that arises when trading pre-market or during business hours is that there is not as much liquidity or trading volume due to the smaller amount of traders. However, stock prices tend to act as they do during the trading day.
Additionally, stock prices may change from the closing price because after-hours and pre-market traders may have access to information that regular-hours traders did not. Prices may rise or fall based on extended trading hours and may be carried over to the next regular trading session.
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The first place investors should look to find information about pre-market and after-hours activity is the data service in their brokerage account, if they have one. Brokerage information services often provide detailed after-hours market trading data and are usually free with a brokerage account. Traders will often be able to not only trade during this period, but also see the current bid and ask prices for certain securities and the price change compared to the previous period’s close.
If you don’t have a brokerage account or your broker doesn’t provide this service, several free sites give you access to pre-market and after-hours data. For example, the Nasdaq website offers comprehensive quotes for Nasdaq-listed stocks, showing every trade—including the price, time, and size of trades made in after-hours trades.
For pre-market trading information, use the pre-market quote service, and for after-hours details, use the tender offer service. Although the NYSE website does not offer such a detailed service in terms of depth, the quote service on its site shows you the latest stock movements during the after-hours market.
Other services, such as Yahoo Finance, will show the last trade made in pre-market and after-hours markets. These services typically cover all stocks, whether traded on the NYSE, Nasdaq, or another stock exchange.
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Pre-market is a period of trading activity that occurs before the opening of the stock market. Although its trading session usually occurs between 8:00 am and 9:30 am ET each trading day, several direct access brokers allow access to trades before the market opens as early as 4:00 am.
However, very little activity occurs for most stocks this early in the morning unless there is news. Liquidity is also extremely poor, with most stocks showing only stub quotes. Thus, while pre-market trading allows for an early jump in reactions to news—especially events occurring in Europe or the United Kingdom—limited volume can give a misleading perception of a stock’s strength or weakness. Trading during these hours can be risky due to the possible collapse from huge bid orders.
Most early birds wait to start accessing the front of the market at 8am.
The New York Stock Exchange introduced after-market trading in June 1991 by extending trading hours by one hour. The move was in response to increased competition from the international exchanges in London and Tokyo and private exchanges, which offered more trading hours.
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Today, after-hours trading begins at 4 p.m. ET and can run as late as 8 p.m., though volume typically thins much earlier in the session; the majority are done by 6:30 p.m. As in pre-market hours, trading in the afternoon hours is done through ECN.
After-hours trading is something traders or investors can do if news breaks after the close. Share price changes in subsequent hours are a valuable barometer of the market’s reaction to newly released information. However, after-hours price changes are more volatile than regular-hours prices: as with the pre-market, illiquidity and lack of volume can be a problem. Institutional investors or large investors may choose not to participate in after-hours trading regardless of the news or event. As a result, the stock may fall sharply after hours, only to rise when the regular trading session resumes the next day.
Trading hours can affect premarket prices and volume based on the information traders used to make trades. Both extended hours sessions can also affect regular hours trading.
Pre-market trading typically takes place between 4:00 a.m. ET and 9:30 a.m. ET. After-hours trading usually takes place from 4 p.m. ET until 8 p.m. ET. Some brokers allow their users to place orders from the close of the market to the pre-market opening for execution for after-hours and pre-market trading.
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You can place buy and sell orders during pre-market hours. Some brokers allow you to enter market orders close to the pre-market open; orders are fine until the premarket opens at 4 a.m. ET.
Pre-market and after-hours trading is conducted outside of regular trading hours through ECNs that match buyers with sellers. Although they allow traders to react to news that occurs outside of regular trading hours, pre-market and after-hours trading carries several risks, such as illiquidity and price volatility. Such trading also allows traders to trade based on news, such as earnings, that occur after regular trading hours.
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So I am writing this blog post to share my thoughts on the subject. I hope it helps you make a better decision. In case if you still have any queries feel free to write them in the comment box. I want to solve all your questions.
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My simple answer is NOW! Now is the best time to start trading options hedging strategies. The reason is:
If you’ve been paying attention, you’ll see that market volatility has increased quite a bit over the past few months. One day we saw an Upside movement. The second day it came down. And what is interesting is: after this fluctuation the stocks/indices only expired within a certain range. It ends where it started.
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If you are a passive trader then it is difficult to manage your positions when the trend seems to change every day.
One of the main reasons I have found is that more and more people are entering the market every day. Each trader has placed several orders that bring some liquidity to the market.
Let’s imagine, you have a short position in SBIN and today you say that SBIN is going up at a very high rate. Can you sit back while watching MTM where the loss is growing?
If you want to relax, then you need to limit your risk first. If you are mentally prepared for the maximum loss you will get from any particular strategy or position, then chances are you will end up managing the trade better.
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The stock was ICICIBANK and when I created this strategy it was trading at around 905. My discount was 565 – 935