After-Hours Trading: How It Works, Pros & Cons, Example

After-Hours Trading: What It Is and How It Works

By Adam Levy – Updated Dec 17, 2024 at 1:51 PM

Key Points

After-hours trading extends from 4 p.m. to 8 p.m. ET, allowing stock trades beyond usual hours.
Only limit orders are used in after-hours trading, posing unique pricing and liquidity risks.
Technology now enables most investors to participate in after-hours trading, reacting quickly to news.

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An infographic showing after hours stock market trading hours, which occur from 4 P.M. to 8 P.M. — Image source: The Motley Fool.

Trading outside of normal hours used to be limited to institutional investors and high-net-worth individuals. Today, technology has made it possible for the average investor to place orders for after-hours execution.

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High Net-Worth Individual (HNWI)

People who have amassed investable (or liquid) assets of $1 million or more.

After-hours trading allows investors to react to company earnings releases and other news that typically takes place before or after normal trading hours. Prices can swing wildly on an earnings release or news that a CEO is stepping down. If you want to buy or sell as soon as possible based on the news, you'll need to place an order for after-hours trading.

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About the Author

Adam Levy is a contributing Motley Fool stock market analyst covering technology, consumer, and financial stocks and how policy, economic, and consumer trends shape personal finance, Social Security and retirement savings. Before The Motley Fool, Adam was a financial advisor at Edward Jones. He studied finance and electrical engineering at Carnegie Mellon University.

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Adam Levy has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.