After Hours Trading Definition

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After-hours trading may seem an advanced term for a beginner, however, after reading this article, you will be able to expand your trading opportunities by using After-hours trading. In this article, we will answer the question “what is after hours trading in India?” and discuss how do you trade after hours. In addition, we will discuss the risk associated with it.

What Is After-hours Trading?

After-hour trading is exactly what it sounds like: it refers to taking trades beyond the regular trading hours. i.e., once the stock market closes for the day.

After-hour trading sessions may happen before or after the regular trading session. Typically, After-hour trading in India is between- 4:00 PM to 8:55 AM (BSE) and 4:00 PM to 8:55 AM (NSE).

The duration for the same differs depending on the market situation. From the type of securities available for trading, to the type of orders accepted, this feature has a set of rules and guidelines that the investors must follow.

Earlier, trading outside the normal hours was limited to High Net Worth Individual (HNI) , and Non-Institutional Investor (NII) but now, technology has made it possible for the average investor to place orders for after-hour execution. A retail investor can select an AMO (After Market Order) on the broker’s platform to place an order post the regular trading hours.

Understanding after-hours Trading

After-hours trading is making investments or trading after the regular trading hours. Here, you get a chance to place the order when the stock exchanges (NSE & BSE) and the market is closed for the day.

The emergence of Electronic Communication Networks (ECN) is helping expand access to after-hours trading, making it possible for retail investors to place trades outside of regular trading hours. This helps investors to act quickly on news, events, and activity that occur when the NSE & BSE are closed.

What are after-hours Trading Timings?

The exchange (NSE & BSE) closes at 3.45 PM and re-opens at 9:00 AM, the next day. After-hours trading takes place in the period between when the market closes and then re-opens the next trading day.

If you want to do equity trading, the after-hours trading takes place from 4:00 PM to 8:55 AM for BSE and 4:00 PM to 8:55 AM for NSE.

And if you want to trade in derivatives such as Future and Options (F&O), the after-hours trading takes place between 4:00 PM and 8:55 AM .

Why Is After-hours Trading Important?

While the entire world waits for those regular trading hours to invest in the share market which is a standard choice, there are investors who look forward to exploring the opportunities of after-hours trading.

Benefits of After-Hours Trading

  • Convenience: After-hours trading is a convenient feature for investors to place orders post the regular market hours.
  • Opportunity to take advantage of market news: After Market Hours trading provides investors with the opportunity to trade with the information (after the closing of the market on a regular trading day) which can have a short-term effect. One can take action with regard to breaking news stories or fresh information before the next day’s market open.
  • Technical analysis: You can analyze the stock chart and react to it prior to the market opening at 9:00 AM, the next day.

Risks of After-Hours Trading

After-hours trading comes with certain risks which are not associated with trading on an exchange during regular trading sessions. The major risks of after-hours trading are as follows:

  • Price Risk: Some brokers will accept your after-market hours order at market price on the opening day only. So, you should check the feature on the brokers’ platform before using it.
  • Risk of News Announcements: Normally, news announcements, and important financial information may get announced outside of regular market hours which may cause an exaggerated effect on share prices and an after-market order may go into loss as soon as the market opens.

Conclusion

We hope now you are clear with what is After- hour trading and how it works? It may come with risks, but share trading is anyway risky. If done wisely, you can reap the benefits.

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