What is “pre-market” and “post-market” in stock exchange? Why do stocks change their prices outside of trading hours?
In: 1
Extended hours trading occurs off the stock exchanges through other means ([electronic communication networks](https://www.sec.gov/news/studies/ecnafter.htm)).
The biggest warning is that because of the lower trading volume during these hours, price volatility and bid/ask spreads can sometimes can be large (hence why “market” order types aren’t offered)
The stock exchange is a convenient place for people who want to buy and/or sell stocks to find each other. But people aren’t barred from trading amongst themselves by other means at times when the exchange isn’t open.
The stock market hours aren’t its real hours. You can actually trade outside the hours its officially “open”, this is called pre-market (before its official open) and post-market (after its official closed).
However, there is not many people trading during that time, so executing trades can be difficult as you need a buyer and a seller for each trade
The vast majority of pre/post market trading is done by investment/financial firms/companies and such, not by retail traders or “regular” people, who rarely interact with the market outside of normal hours
Latest Answers