March 17, 2021

What is After Hours Trading?

Trading became a very popular activity in recent years. Several platforms are now available for investors that want to have access to trading stocks, cryptocurrencies, forex and commodities, among other things. 

Trading became a very popular activity in recent years. Several platforms are now available for investors that want to have access to trading stocks, cryptocurrencies, forex and commodities, among other things. 

After hours trading is one of the most popular terms that we hear when we trade. But how does the after hours market work? Who is allowed to trade after hours? Is it bad to buy stock after hours? Why do stocks spike after hours? 

These are some of the questions we answer in this post. 

Disclaimer: the information provided by AltSignals and its writers should not be considered investment advice. We are not financial advisors. The content should be considered for educational purposes only. Never invest more than what you are able to lose. We are not responsible for any decision you make following this guide. 

What is Trading?

Trading is an activity in which investors speculate with the price of different assets to make profits. Trading can be used for different purposes too. For example, trading commodities futures could be a way to hedge against possible price fluctuations related to specific assets.

With the expansion of different trading platforms, traders from all over the world get access to many assets. This is why it became so important to understand what trading is and how after hour trading works. 

What is After Hours Trading?

After hours trading involves trading securities, stocks or commodities after the market closes. As you know, the market operates during traditional business hours around the world, usually between 9:30 am and 4:00 pm. Nevertheless, this depends on your country of residence. 

Once the market closes, buyers and sellers can match their orders using electronic communication networks (ECNs) rather than traditional stock exchanges. In this way, they can still buy or sell stocks once the market closes. 

Who is Allowed to Trade After Hours?

Users trading in some platforms is allowed to trade after hours. However, this would depend on the exchanges and the availability of the services they offer. Every single user that trades on an exchange after trade hours enabled should be able to get access to the market. 

Take into consideration that volume usually falls after hours. This is because most of the traders end the day as soon as the market closes. 

Is it Bad to Buy Stock After Hours?

There are some risks of doing after hours trading. The first thing that we have already mentioned is related to the trading volume. Volumes sharply fall once the market closes, thus, large orders could eventually move the price of an asset. 

Additionally, if one session ends positively, many traders that didn’t have the chance of getting access to the stock would buy after hours. Nevertheless, as soon as the market opens the next day, a small correction could take place. The same could happen if you sell a stock after hours. 

Why do Stocks Spike After Hours?

Stocks spike after hours because there is a larger interest in the stock. Demand continues to be high, even when the market closes. If a large number of users have access to after-hours trading, they could easily buy stocks after hours and push the price higher.

Due to the same reason, stock prices could fall after hours. Everything depends on supply and demand and how this affects the market. 

Types of Markets

There are different markets. There are markets for commodities, currencies, digital assets, stocks and options. Everything depends on the assets you want to trade. Cryptocurrency trading became very popular in recent years due to the large price increase experienced by Bitcoin (BTC) and other digital assets. 

Cryptocurrency After Hours Trading

Cryptocurrency after hours trading is simply nonexistent. There is not such a thing as cryptocurrency after hours trading. The cryptocurrency market is opened 24 hours 7 days a week. It never coles as traditional stock markets. 

Indeed, if you want to trade cryptocurrencies at 3 am, you can do so without any issues using your local exchange. Trading platforms are opened 24 hours and traders continue to buy and sell virtual currencies even at night. 

It is worth taking into consideration that during weekends or not usual trading hours, there could be lower volumes. This could also be a more inefficient way to trade digital assets. There is no best moment to trade digital assets. You can get access to the market as soon as you decide to do so.

AltSignals Team

Proficient authors guiding you with transparency, integrity and education through the finance international markets

The AltSignals writing team consists of experts dedicated to the world of finance and technology, with a particular focus on cryptocurrencies and forex. Our writers bring a broad range of knowledge and experience, cultivated through years of arduous and direct involvement in financial markets, as well as intense technological collaboration.

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At AltSignals, we believe that transparency and education are the key to empowering our readers. Therefore, our content is meticulously researched to ensure its accuracy and thoroughness. Each of our articles is created with the aim of providing educational insights and in-depth analysis, helping both beginners and experienced traders.

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Integrity is certainly the foundation of our editorial process. The team follows rigorous journalistic standards with careful review, all to ensure that each publication is meticulously researched and exceeds our readers’ expectations.

Our mission is to provide analysis that informs as well as guides users and enthusiasts through the complexities of the cryptocurrency and forex markets. In line with our motto of “quality over quantity”, we guarantee that only the highest quality trading signals are published.

In addition to our commitment, which extends beyond the simple transmission of useful information, our in-depth analysis focuses on profitability and effectiveness squarely, avoiding the common industry habit of prioritizing profit over accuracy. Our traders are strategic experts who offer personalized help to those seeking worthwhile portfolio management tactics.

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Our authors are proficient in a variety of topics across the financial spectrum, from emerging trends in blockchain to the nuances of forex trading. This diverse range of knowledge allows the team to cover several topics, ensuring our content is always comprehensive and deeply specialized.

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We understand that the world of trading can be complex for many. Therefore, alongside producing informative articles, our team is also committed to interacting with the community. Through comment sections, forums and direct support, we encourage our readers to seek clarification and sharpen their understanding, promoting an environment of continuous learning.

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Looking to the future, the AltSignals writing team is imbued with a vision that transcends regular publishing, and continues to dedicate itself to discovering and reporting on the latest innovations and trends available in the market. We are constantly seeking to improve our skills and expand our knowledge, with the ultimate goal of being a reliable and respected source in digital financial journalism.

There is great commitment to discovering and reporting not only the latest news and trends in the market, but also to equipping our readers with the tools they need to navigate volatile markets with confidence. We firmly believe that, with the support of an appropriate platform coupled with accurate guidance, our readers and traders can turn market volatility into a competitive advantage.

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