Extended Hours - An Advantage Or A Hindrance?

[Alpha Trader]

(See *** below)

On a personal basis, I do not look at extended hours for a number of reasons. However, I am sure there are those (esp. those that trade the first 1.5-2 hours of the day) who utilize it avidly.

Since I don't utilize the extended hour session, the pros and cons below may be a limited view I have on these sessions. Additional insight is appreciated.

Pros:

1) Supply/demand can be gauged prior to market open
2) Price manipulation is low
3) Defines new levels of S/R or redefines previous levels to demonstrate the conviction of those levels
4) Gives a different insight of chart pattern compared to when extended hours not shown

Cons:

1) Trades thinly and so level may not be as important
2) Opening moves stronger and wider and so extended hours levels may be breached more easily
3) Lack of liquidity and wider spreads may cause unnatural "patterns"


***Note that the above question does NOT pertain to TRADING the extended hours, but more about the utilization and application of extended hours information, to trade the regular hours.

 

[OptionGuru]

Extended trading hours is beneficial for Option traders. The gaps on the underlying can be very profitable.

 

[Scataphagos]

Since I don't utilize the extended hour session, the pros and cons below may be a limited view I have on these sessions. Additional insight is appreciated.

Some players pay attention to the "all session" markets.. which includes "after hours". Some players pay attention only to RTH... "regular trading hours". Both are legit for traders.

 

[Iron.Maiden]

I try to keep it simple and stick to cash index reads but after-hours can be benefitial for being able to land an exit target before the day even begins, then you get to spend time with loved ones or do errands while most work

 

[lawrence-lugar]

I like the pre-market session. I don't trade it, but I use it as a general indicator (combined with other things) of where or how the broader market will behave during the day.

 

[Alpha Trader]

@OptionGuru and @lawrence-lugar interesting how you options guys find so much more value in the extended sessions as opposed to non-option traders. You guys play a different ball game though.

 

[sprstpd]

Why do you think "price manipulation is low" during extended hours? I could be wrong, but I would think that the illiquidity during extended hours would exacerbate price manipulation.