How to Do After-Hours Trading

Before the advent of the Internet in stock trading, traditional stock markets were the only avenue to buy and sell stock during a limited time frame. Then along come after hours trading that provides investors round-the-clock access, in some cases, to trading stock. After-hours trading does have some major caveats and contains significant differences from the traditional trading markets.

Difficulty:

Moderate

Instructions

1. Open an account with a brokerage firm that offers access to the after-hours trading market. Some of these firms have minimum funding requirements, and every firm sets their rules for after-hours trading.

2. Fund the account with at least the minimum amount of capital to have access to the after-hours trading market.

3. Research the potential stocks that you want to trade in the after-hours market.

4. Select the specific stock that you want to buy or sell if you already own a stock.

5. Establish the price at which you want to buy or sell the stock and the total number of shares. Most after-hour's markets only allow limit orders, which are stock orders that you must specify the exact price you are willing to accept or pay for a stock.

6. Place the after-hours market trade. After establishing the amount and price point for a specific stock, you will then place the order on the Electronic Communications Network, or ECN, on which the brokerage firm has access.

7. Wait for the order acceptance by another member of the ECN looking to buy or sell shares of the stock you requested. Sometimes, the order will go unfilled because of the lack of a matching order on the buy or sell end of the stock.

8. Receive a trade notification receipt. Once the after-hours trade is complete, you will receive a notice that the trade was successful.

Tips & Warnings

• Be sure to read all of rules and stipulations of any after-hours market you decide to use for trading. Read all the information regarding trade execution and rules before you make a trade.

• Understand that after-hours markets are not as regulated as the traditional markets are. This can lead to some trading issues and more headaches than it is worth.