What trends and data influence after-hours traders the most?

By Ryan C. Fuhrmann AAA
A:

For over a decade now, major U.S. stock markets have offered extended trading hours outside the standard trading hours of 9:30 a.m. to 4:00 p.m. Central Standard Time. Despite many years to iron out kinks and encourage wider trading periods, trading outside of regular trading hours carries additional risks. Below is some further insight on how after-hours traders study the markets. 

Track the News Closely

Companies generally look to release earnings and other major news events outside of regular trading hours. The intent is to let market participants read the news updates and spend some time thinking about what this means to a company and its operations. Some companies, including Warren Buffett’s Berkshire Hathaway (BRK.B) and Dillard’s (DDS), have even gone as far as releasing news on the weekend to let the news be disseminated through the market. For traders able to make moves after-hours, it is important to read news as quickly as possible, or have a prior estimate of earnings news flow to be able to act when the actual results are released.  

Trading Data

Trading data, including basic stock quotes, volume trends, and bid/ask spreads are more difficult to come by outside of regular trading hours. After-hours traders must work harder to track this information down and verify its accuracy. Major news sources, including Marketwatch and Yahoo! Finance, offer after-hours trading updates. One of the better sources is the exchanges themselves. Nasdaq and the New York Stock Exchange (NYSE) have websites with information that is timely and accurate.

Make Volatility Your Friend

Savvy traders are on the lookout for volatility or knee-jerk reactions where a stock temporarily becomes disconnected from its fundamentals. Some traders specialize in trading at night, and the ability to track global markets that are open when U.S. exchanges are closed can lead to information advantages over other investors.   

The Bottom Line

After-hours trading is  risky, but following vital data can make trading outside of regular trading a profitable endeavor for investors.

At the time of writing Ryan C. Fuhrmann, did not own shares in any of the companies mentioned in this article.

 

RELATED FAQS

  1. Why does after-hours trading (AHT) exist?

    The advent of the Internet and electronic information exchanges has opened financial market trading to millions of investors ...
  2. During what time does after-hours trading (AHT) occur?

    A lot of buying and selling can be done outside of the traditional trading hours. Find out when after-hours trading starts ...
  3. Why are the bid and ask quotes usually so far away from each other in after-hours ...

    After-hours trading is defined as the exchange of securities outside of an exchange's specified regular trading hours (usually ...
  4. What are common strategies traders implement when identifying a Bearish Engulfing ...

    Learn how to spot a bearish engulfing pattern, and learn some of the trading strategies you can implement to take advantage ...
RELATED TERMS
  1. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The ...
  2. Commercial Real Estate Loan

    definition of a commercial real estate loan
  3. Bidding Up - Securities

    The act of increasing the price an investor is willing to pay ...
  4. Bear Fund

    A mutual fund designed to provide higher returns when the market ...
  5. Mass Index

    A form of technical analysis that looks at the range between ...
  6. Money Flow Index - MFI

    A momentum indicator that uses a stock’s price and volume to ...
Related Articles
  1. What Is The Difference Between After-Hours ...
    Trading Strategies

    What Is The Difference Between After-Hours ...

  2. Tips To Beat Inflation For Near-Retireees
    Investing News

    Tips To Beat Inflation For Near-Retireees

  3. Top Insurance Companies
    Trading Strategies

    Top Insurance Companies

  4. What Merger And Acquisition Firms Do
    Investing Basics

    What Merger And Acquisition Firms Do

  5. Index Options: A How-To Guide
    Options & Futures

    Index Options: A How-To Guide

Trading Center