Extended Hours Trading Of Stock... Now Available To The General Public

Connections Are Made From Buyer To Seller Through ECNs

Extended hours trading of stock can be practiced on various networks. They are called Electronic Communication Networks, or ECNs for short.

Each ECN has different rules, such as hours of operation and maximum number of shares that can be traded at a time. However, all are open to the general public. In order to trade on an ECN, you must go through a stock broker.

Different Broker, Different ECN, Different Rules

Extended hours trading of stock differ from broker to broker. Different stock brokers have different rules. You should check with your broker to find out exactly what your limitations are.

For example, sometimes stock orders will be carried over to the next trading day. Or, if you place a trade during the regular trading day, it may be carried over to after hours trading.

There is also sometimes a limit on how many shares you can trade at a time.

Hours also differ from broker to broker, depending on which network your broker has decided to work with.

Another notable limitation is that you may or may not be able to see the trading prices on the other networks. And even if you can see the prices, you may not be able to make trades there.

So, if extended hours trading of stock is important to you, do your research and pick a broker that works with a network that works for you.

Greater Risk

One of the risks of extended hours trading of stock is that prices are more volatile. This is due to less trading volume. This also means that your money is less liquid. In other words, it will be harder for you to cash out your stock quickly.

Not all stocks that are traded on the regular markets will be traded on the ECNs. Some will not be traded at all, due to far less demand. While, some will be traded with very little volume.

A Few Limitations

Depending on which ECN you trade with, you may be limited to placing only limit orders. Most ECNs require this. A limit order is when you pick your price that you want to trade at. If there isn't someone else who can meet or beat that price, the order either gets terminated or extended on to the main market. This depends on which broker you go through.

If you have never heard of extended hours trading of stock or ECNs, you are not alone. Many people have not or have just decided not to use them. Hence, the lower trading volume. This is the case, even though it has been...

Available To The Public Since 1999

Extended hours trading of stock has been available to the general public for little over a decade. Trading on these networks are mainly used by professionals or high net worth investors. These networks used to only be traded on by these people.

Now they are open to the public. Even with this change, there are not many average investors interested in using them. This has been the case ever since 1999. One of the main reasons that they are not used often is because of the...

Greater Volatility

Of course, with regular stock trading there is volatility. And, with lower volume stocks comes greater volatility.

But, since all stocks in extended hours trading of stocks have lower volume, there is more volatility all around. This can be good for investors as well as bad for investors. So, if you don't like this, as many people don't, you may want to stick with the regular stock market.

Different Network, Different Stock Price

To conclude, there are different electronic networks you can trade on after hours. Different brokers use different networks. Therefore, each broker has a different set of trading rules. You must find the broker that works for you.

You can trade the same stock on various networks at the same time. This is a technique that you may want to study more and possibly even specialize in. This is an attractive technique since the price of one stock is different depending on which network you are looking at.

There are benefits and risks to extended hours trading of stock. I hope you now have a more clear idea of what they are and if this is right for you.