What Is After-Hours Trading?

After-hours trading refers to the buying and selling of stocks after the main stock exchanges have closed. Normally, the New York Stock Exchange and the Nasdaq, which are two major stock markets in the U.S., operate from 9:30 a.m. to 4:00 p.m. Eastern Time. However, trading can continue after these hours, from 4:00 p.m. to as late as 8:00 p.m.

This kind of trading happens through electronic marketplaces that connect potential buyers and sellers without needing a physical stock exchange. These platforms are called electronic communication networks, or ECNs. Just imagine it like an online marketplace where people can continue trading stocks using their computers or smartphones, even after the main stock markets are closed.

One thing to note is that not as many people trade after hours, so it can be a bit harder to buy or sell stocks quickly. This can make prices more volatile, which means they can change rapidly. It’s a bit like selling something in a less crowded market; with fewer buyers and sellers, prices can jump around more than during the regular hours when many people are trading.