Extended hours trading lets you buy and sell stocks outside regular market hours. It offers opportunities but comes with unique risks. Here is what you need to know.
Trading Hours
- Pre-market: 4:00 AM - 9:30 AM ET
- Regular hours: 9:30 AM - 4:00 PM ET
- After-hours: 4:00 PM - 8:00 PM ET
Broker access varies: Most retail brokers offer limited extended hours (typically 7-9:30 AM and 4-8 PM). Check your broker's specific hours.
Why Trade Extended Hours?
- React to news: Earnings and announcements happen outside market hours
- Global events: Respond to overseas developments before the market opens
- Convenience: Trade around your work schedule
- First mover: Get positioned before the crowd
Risks of Extended Hours Trading
Lower Liquidity
Fewer participants mean wider bid-ask spreads, harder fills, and more price volatility. A stock might move 5-10% on low volume, then reverse at the open.
- Wide spreads: You may pay more to buy and get less when selling
- Price gaps: Large moves on small volume
- Partial fills: Your order may not fully execute
- Limit orders only: Most brokers require limit orders (no market orders)
- Different prices: Extended hours prices may not reflect opening price
Extended Hours Order Types
Most brokers only allow limit orders during extended hours:
- You must specify the price you will pay or accept
- Orders may not fill if price does not reach your limit
- Some brokers have extended hours-specific session flags
When Extended Hours Trading Makes Sense
- Reacting to earnings announcements
- Major news events (FDA approvals, mergers)
- Exiting positions before potential gaps
- When you have a specific price target
When to Avoid Extended Hours
- Routine trades that can wait for regular hours
- When spreads are excessively wide
- Illiquid stocks with minimal extended hours activity
- When you need precise execution
Tips for Extended Hours Trading
- Use limit orders always
- Check the bid-ask spread before trading
- Trade smaller sizes
- Be patient - do not chase prices
- Watch for reversals at the regular market open
Track All Your Trades
Pro Trader Dashboard tracks your positions and monitors profit/loss in real time.
Summary
Extended hours trading lets you react to news and trade outside regular hours. However, lower liquidity means wider spreads and more volatile prices. Use limit orders, trade smaller sizes, and only trade extended hours when you have a good reason. Most routine trades are better executed during regular market hours.
Learn more: trading earnings and day trading vs swing trading.