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February 2012
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Why do stock prices fluctuate after the market closes?

(Once the stock market closes, some stocks continue to gain or lose, sometimes more drastically than during the trading day. Their quote shows “afterhours”. What is this? I heard analysts talking about electronic trading. What is that?)

Answer:

In the US market hours are from 9:30 a.m. to 4:00 p.m. Eastern time. However, the electronic market which represents the aggregation of all ECNs (like ARCA, Instinet, Brut, etc) continue are generally open for trading from 8:00 a.m. Eastern time to 8:00 p.m. Eastern time. The time between 8:00 a.m. and 9:30 a.m is called “pre-market hours” and the time between 4:00 p.m. and 8:00 p.m. is called “after-market hours”.

Because companies are releasing news almost 24 hours/day these days, their stock price reacts to these news releases whenever they become available. Also, the world does not go to sleep at 4 p.m. eastern time and stocks in general are reacting to all kinds of news being released on a 24 hour basis.

Individuals can participate in these after-hours market activity by having their trading accounts with brokerage companies which offer their customer access to their accounts via Direct Market Access systems. These systems are considered to be electronic trading systems and can be run on your computer at home utilizing high speed internet access like DSL, Cable or fibre-optics.

If you would like to get more information on Direct Market Access systems or open an electronic trading account I would suggest you speak to the guys I use.

They have been very professional and helpful to me.

Good luck.

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