How to Buy Stocks After Hours

After hours stock trading markets may be more illiquid.
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After-hours stock trading is a way for investors to buy and sell stocks after the stock market closes. The normal trading hours for the New York Stock Exchange (NYSE) and the NASDAQ is 9:30 am to 4:00 pm Monday to Friday Eastern Standard Time. Originally, only large institutional investors like banks and pension funds could trade after hours, but as technology evolved, this option became available to the individual investor also. Trading stocks after hours has its advantages and disadvantages so it is best to learn all you can to see if after hours trading is for you.

Step 1

Educate yourself about the stock market. To be successful in trading stocks, you need to learn all you can. Online, the Motley Fool, Smart Money and Kiplinger's Personal Finance are three sources of good information for beginning stock investors. Books and courses are also an excellent way to get in-depth knowledge about buying and selling stocks profitably.

Step 2

Choose stocks on the NYSE and NASDAQ. Stocks traded on these exchanges are available for after hours trading between 4:30 pm and 6 om. Stocks on the American Stock Exchange are not. One of the best sources of information about individual stocks is Value Line. This service offers detailed information thousands of stocks including its exchange, price history, and earning reports.

Step 3

Look for stocks with growth potential. While buying stocks after hours is slightly different than buying stocks during regular trading hours, the fundamentals remain the same. When choosing a stock, look for long term growth. (Day trading is not possible after hours.) Find stocks with steady growth and low debt. One method is to buy stocks of companies whose products and services you use and are happy with, like food and clothing companies.

Step 4

Find an online broker that provides after hours trading. Not all stock brokers offer after hours trading, and some charge higher commissions for the service. Shop around for a broker that offers the services you need at commission rates you find acceptable. Not all brokers who provide after hours trading also offer real time stock quotes when the market is closed. The NASDAQ website offers real time quotes of all stocks on its exchange, but the NYSE does not. There are other sources of after hours prices, such as Yahoo Finance.

Step 5

Consider the risks of after hours trading. Fewer investors are buying and selling stocks after hours, which may affect the price. Generally, an investor gets a better price if many people are competing to buy and sell stocks. Trades affect prices more radically after hours. This volatility is a reflection of reduced trading volume after hours. Small investors are at a disadvantage because they are competing with large investors who have access to more money and resource tools. Some experts recommend placing limit orders during after hours trading because of the volatility. Limit orders set a specific price for buying or selling a stock.

Step 6

Keep yourself informed. Most companies issue quarterly reports and other press releases after the closing bell or in the early morning before the market opens. Investors with after-hours accounts can react immediately to news immediately, while fewer people are buying or selling.

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