Difference of After Hours Trading and Trading in Regular Market Hours

Trading in Regular Market
Trading in Regular Market

There are traders who cannot get enough of trading even though they already traded for one whole day. For these people, thankfully, the Nasdaq and NYSE were able to extend the trading hours from the previous 4:00 PM to 8:00 PM. This is referred to as after-hours trading work. But what really happens at the after-hours trading? It is important to know that after-hours trading is a different thing and here are the things that you need to know about it. Also, you have to use a reliable trading platform like MetaTrader 5 when dealing with the complex nature of after-hours trading.

After Hours Trading vs Trading in the Regular Market Hours

Knowing what you can get before joining the market is important as this will help you decide the right thing to do and the right decisions to make. After-hours trading is a significant tool that you can use to be able to increase your chances of acquiring profit in trading. Just like any other important tools out there, you need to know and understand how to properly use it so you can maximize its advantages. In this case, you should check out these differences between trading in regular market hours and after-hours trading.

Order Types

During after-hours trading, market orders don’t actually work. Because of that, you have to ensure that you utilize a limit order to be able to execute trades. Limit orders allow you to set a specific price for your trade in which you will be willing to buy or sell the asset.

After-hours trading offers less transparency

Usually, when you do after-hours trading, you get to trade in dark pools and electronic communication networks (ECNs). It is also in the after-hours where you can see all those advanced strategies in trading and hidden orders.

After hours trading have fewer traders and also fewer shares

Most of the time, there will be 115 million shares going around on a regular session of SPDR S&P 500 ETF. That number is totally higher compared to the number of stocks being traded when you enter post-marketing trading.

When the markets get thinner, they become more volatile

ECNs volunteer during after-hours trading. More so, they are not required to give you the best price possible or high liquidity.

Automatic orders won’t work

In normal trading hours, you will be asked to use different order types so as to avoid drastic losses. Unfortunately, these order types such as stop losses won’t actually get triggered during after-hours trading.

More beneficial for fast traders

For fast traders, they will be the ones who can benefit more in after-hours trading. Because you won’t be able to place any market order, traders need to act fast and take advantage of any possible positive opportunities that could arise within a matter of minutes. This is a disadvantage among slow traders and maybe, you should just stick to the regular trading hours.

No Options market is available in after-hours trading

Options trading is becoming a hit nowadays and it is even available in MetaTrader 5. However, if you are trying to venture the after-hours trading then you just get disappointed because Options trading isn’t available in after-hours trading.