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Saturday, February 13, 2016

What is after-hours trading?

Nasdaq share displayImage copyrightGetty Images

  • When investors buy and sell shares outside the regular opening hours of major exchanges
  • It exists because big financial institutions want to trade large blocks of shares 24 hours a day
  • Adopted in the 1990s by financial institutions and some rich investors; the growth of online trading led to ordinary investors being able to take part a few years later
  • Riskier than trading during regular hours – trading volumes are lower and share prices can be more volatile, meaning the spreads between the buying and selling prices of shares can be wider
  • With less information available it can be harder to work out what’s behind some after-hours price movements, leaving small investors at a disadvantage
  • But potential profits can be highe

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