After-hours trading, also called post-market trading, extended-hours trading and post-close session, is the segment of the market that takes place outside of regular trading hours. This often happens after the stock market closes for the day and doesn’t begin again until the next morning. These extended hours can be a great opportunity for investors to get in and out of positions quickly, avoid some of the volatility that comes with traditional trading sessions, and take advantage of opportunities that might not exist during other times. Trading during extended hours is similar to the types of trading you’d do during normal hours, with the exception that volume is often lower. The difference in volume means that the price of a given security may not be as accurate as it would be during normal hours. This can be good for traders who are trying to buy or sell a stock, as it gives them more flexibility.

Trading in the after-market takes place from 4:00 pm to 8:00 pm ET.

Institutional and retail investors can trade after-hours.

Because volumes are lower, it’s more important than ever to utilize proper risk management. In other words, before you enter any trade, you should have a clear stop-loss in place, and you must follow your trading plan. If you’re new to after-hours trading, it’s important to start small and build your confidence. After all, you don’t want to jump into a trade just because you can do so at an inconvenient time. Instead, you want to use after-hours trading to your advantage and pick times when you know there will be less competition. You can also use after-hours trading to enter short positions. Short selling generally isn’t as common during regular hours, so after-hours trading is a great opportunity to take advantage of this strategy.

After-market movers are stocks that have been moved significantly in the after-hours trading session. They are often used as a way to gauge investor sentiment. After-market movers can also be used to identify stocks that have been affected by breaking news or as a way to indicate whether the stock is undergoing any major shifts.

When you’re trading after hours, you’ll need to follow the same basic trading principles that you would during regular hours. In other words, you’ll need to do your research before entering a trade, pick a stock that you believe will rise in value, and use a stop-loss to protect yourself from losses. After-hours trading does give you more flexibility in terms of timing, but you’ll still need to be disciplined and only enter a trade if you feel confident that you’ve done the proper research. Remember that volume is lower during the after-hours session, so moves are often much sharper. When you’re trading stocks after hours, you’re also trading against exchange-traded funds or ETFs. While these funds don’t trade during regular market hours, they often make dramatic moves after markets close. This can create a lot of volatility and is another reason why trading in the after-hours session can be a bit more challenging.

After-market and next-day opening prices can differ significantly. It's possible for a stock to drop a lot in after- hours and then go up when regular trading starts again the next day.

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