How are after hour trading rates determined?
I am new to stock buying and I was just wondering that if I buy stocks after trading hours (normally 4.30 EST for NASDAQ) then what price will I be paying? The last price of the stock on the same day or the next day price when the market opens?
Generally speaking, when you place an order outside of normal trading hours the default is to execute at the next open. You would have to elect to have the order executed "After Hours".
After hours stock prices are extremely volatile. During normal trading hours, bid/ask spreads might be a couple pennies, after hours they can be a couple dollars or more. While it's generally OK to create Market orders while the market is open, if you place a Market order after hours (with instructions for after hours execution) you could end up paying a lot more than you expected.
Bid: The price buyers are willing to pay for a stock
Ask: The price sellers are willing to take for a stock
Spread: The difference between the bid and ask prices
Market Order: If you are buying you pay the Ask price. If you are selling you take the Bid price. When you place a market order there are no questions asked, you immediately transact at the current bid or ask price.
When you see prices quoted something like: 109.50/109.75 this is the best available bid/ask prices. The smaller number is the Bid and the larger number is the Ask.