After Hours Trading ??

S

Slim Harpo

I rarely buy stocks as I speculate using options but with that said, can someone please explain to me how the after-hours trading stocks work?

I see I have access to it with my OptionsXpress account and I also see Yahoo posting after hours prices but am confused how it actually works...

I just see 2 rows...One with a bid amount wanted and then one with ask wanted with amount available?

Finally, If I was going to purchase shares in the after market say using OptionsXpress, is the commission structure different than buying shares during regular hours?

Thanks.
 
After hours trading is similar to regular hours, but with a few differences. You can only enter limit (not market) orders, and there will be fewer participants, so the bid/ask spreads will generally be wider and the amount bid/offered will generally be smaller. A stock that has just announced earnings, of course, may be fairly active after hours and may turn out to have fairly good spreads and size.

Some brokers will only deal with a single ECN (usually ARCA or INET) after hours, which may further limit the flexibility you have.

I don't know about OptionsXpress, but some brokers will charge higher fees for after-hours trading - E*Trade charges an extra ECN fee of half a cent per share, for instance.
 
Thanks very much for the solid information loufah!! I appreciate it..

I did check with Options Express after reading your post and the after hours commission is the same as usual..

Thanks again!
 
Quote from loufah:

Some brokers will only deal with a single ECN (usually ARCA or INET) after hours, which may further limit the flexibility you have.
More...

Just to add, there are no market makers and the ECNs are not linked together in after-hours as they are during the regular trading session. It is strictly an order matching service.

A broker that deals with only one ECN may still give you a composite quote combined off all the ECNs. This can be a little deceiving since you may see a Bid/Ask inverted, such as 9.00 x 8.75. Just because someone is willing to pay 9.00 on one ECN doesn't mean the other ECN will match the person that is willing to sell at 8.75. They only match on their own system.

I would recommend finding out which ECN they use, and as loufah stated it usually is ARCA or INET. If that is the case, use this link to get ARCA's open book:

http://www.tradearca.com/marketdata/book_info.asp

Then click on Java version. This will give you the market on the ECN where you are trading.
 
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