What is After-Hours Trading?

After-Hours Trading on the Nasdaq can take place after market close from 4-8pm EST or in the pre-market hours from 4-9:30am EST.

Pre- and Post-market trading used to be reserved for large institutional investors or high net worth individuals, but is now made possible through the improvements to electronic trading networks and the demand from individuals trading from their computers at home.

Interestingly, institutional investors can trade anonymously on the after-hours Nasdaq market, such that virtually no one knows what positions they take during that time. This is called trading in “dark pools of liquidity.” Traders on the after-hours Nasdaq cannot make certain kinds of trades or use certain instruments.

Most trades have to be plain vanilla stock trades, but shorting is allowed. Mutual funds, bonds, and most options do not trade after-hours. No single market will trade 24 hours a day, and this is largely due to the need to settle the books before a new day starts.

Electronic Communications Networks (ECNs) have also allowed traders to access markets for foreign currencies on a global scale. The foreign exchange market, or Forex, trades 24 hours a day. The main players in this market are banks and institutions, but individuals can also trade in micro or nano lots of currency. The Forex market also facilitates forwards, swaps, futures, and options on currency.

What is a Day Trader?
What is Intraday Trading?