After-Hours Trading
After-hours trading is the buying and selling of stocks after the regular market closes at 4:00 p.m. Eastern Time, typically until 8:00 p.m.
When regular US trading ends at 4:00 p.m. Eastern Time, an extended session called after-hours trading begins. It usually lasts until 8:00 p.m., and some brokers offer even longer hours. Trades are matched through electronic networks rather than the normal exchange auction.
The after-hours session is important because many companies release quarterly earnings right after the close. Stocks can move sharply within minutes as investors react to the results and to management's guidance.
The same caveats as in pre-market trading apply. Volume is thin, spreads are wider, and prices can jump around. A big after-hours move does not always hold the next morning. Brokers typically require limit orders in extended sessions so investors do not get filled at unexpected prices.
Example: a stock closes at $120. At 4:05 p.m., the company reports revenue below expectations and the stock trades at $108 after hours. By the next morning, the price could recover partly, stay near $108, or fall further as more investors respond.