What is "Post Market"?
If you are interested in investing in the stock market, you may have heard of the term "post market" or "after-hours trading". But what does it mean and how does it work? In this blog post, we will explain the basics of post market trading and its advantages and disadvantages.
The post market is the period of time after the regular trading hours of the stock market, usually from 4 p.m. to 8 p.m. Eastern Time in the U.S. During this time, some investors can buy and sell stocks through electronic communication networks (ECNs), which are computerized systems that match orders without using a traditional exchange.
The post market is different from the pre-market, which is the period of time before the regular trading hours, usually from 4 a.m. to 9:30 a.m. Eastern Time in the U.S. Both the post market and the pre-market are considered to be part of the extended hours trading, which allows investors to trade beyond the normal hours of the stock market.
Why do investors trade in the post market?
There are several reasons why some investors may choose to trade in the post market. Some of them are:
- To react to news and events that happen after the regular trading hours, such as earnings reports, product launches, mergers and acquisitions, etc. These news and events can have a significant impact on the stock prices and create opportunities for profit or loss.
- To take advantage of price differences between different markets or exchanges. For example, if a stock is listed on both the New York Stock Exchange (NYSE) and the Tokyo Stock Exchange (TSE), an investor may buy or sell the stock in the post market based on the price movements in the TSE.
- To execute large orders without affecting the market price. For example, if an institutional investor wants to buy or sell a large amount of shares, they may do so in the post market to avoid moving the price too much during the regular trading hours.
What are the risks and challenges of trading in the post market?
Trading in the post market is not without risks and challenges. Some of them are:
- Lower liquidity and higher volatility. Liquidity refers to how easily an asset can be bought or sold without affecting its price. Volatility refers to how much an asset's price fluctuates over time. In general, liquidity and volatility are inversely related: when liquidity is low, volatility is high, and vice versa. In the post market, there are fewer participants and fewer shares available for trading, which means lower liquidity and higher volatility. This can result in wider bid-ask spreads (the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept), larger price swings, and higher risk of slippage (the difference between the expected price and the actual price of a trade).
- Limited access and information. Not all brokers offer access to post market trading, and not all stocks are eligible for post market trading. Some brokers may charge higher fees or impose stricter rules for post market trading. Also, not all information sources are available or reliable in the post market. For example, some financial websites may not update their quotes or charts in real time, or some news outlets may not report accurate or timely information.
- Competition from professional traders. Many post market traders are professional traders who have more experience, knowledge, and resources than individual investors. They may use sophisticated strategies, algorithms, and tools to exploit opportunities and gain an edge over other traders. They may also have access to better information sources and faster execution systems.
How can you trade in the post market?
If you want to trade in the post market, you need to follow these steps:
- Find a broker that offers access to post market trading. You can check their website or contact their customer service to find out their fees, rules, and requirements for post market trading.
- Choose a stock that is eligible for post market trading. You can check your broker's website or use a screener tool to filter out stocks that are not available for post market trading.
- Place your order using an ECN. You need to specify that your order is for post market trading, either by selecting a specific ECN or by choosing an extended hours option. You also need to indicate whether your order is a limit order (a fixed price) or a market order (the best available price). Note that some brokers may only accept limit orders for post market trading.
- Monitor your order and adjust it if necessary. You can use your broker's website or app to track your order status and performance. You can also use other sources such as