Extended hours trading question

NoDoji

NoDoji

I don't trade pre-market or after hours except on the rare occasion when I hold a position overnight and my target order is filled. However, I watch the extended hours action on a few stocks and I'm curious if anyone knows how exactly shares trade at prices outside the bid/ask spread. For example I'm watching POT this morning and several lots have traded at 122.72 all the while the bid/ask is 122.75/123.13.

I know that after hours latent prints often appear from earlier in the day, but they're usually at a very different price and are rather large. These appears to be active real-time trades.

In fact, on those rare occasions when I've held a position after the close and had target orders filled after hours, it's usually at a price well outside the bid/ask.
 
Hello NoDoji,

Being an active swing trader I have had a number of my long sell limits that are my exit targets (opposite for shorts) hit outside the bid ask spread in recent years in pre-market and after hours trading.

These appear to be sporadic instances. However in one case for a Nasdaq listed stock the explanation may have been a market maker. Because I noticed the same stock opened much higher that day than my sell limit executed.
 
I don't know the particulars but I suspect that all of the ECN's are not included in the reported best bid/ask. At times, I have placed an order that improves price yet it is not reflected in best bid/ask yet gets filled.

As for outside best bid/ask, I suspect that there may be conditional orders (PEG, etc.) that change as orders come in.

Either way, fills can be erratic.
 
Quote from NoDoji:


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In fact, on those rare occasions when I've held a position after the close and had target orders filled after hours, it's usually at a price well outside the bid/ask.
More...

After hour trading is only done in ECNs. No market makers participate (or they do so in ECNs but they are not required to post an ask and a bid as they are during regular hours). The "bid" and "ask" prices that you see are posted by ECN participants. They are only available as long as the participants have not cancel/withdraw their orders. With a thin volume, orders can get filled and bid/ask prices can change quickly.
 
What is extended hours trading?

Extended hours trading takes place outside of the normal market hours of 8:30 a.m. to 3 p.m. Central time. During normal market hours, brokerages forward orders to "middlemen firms" known as market-makers or broker-dealers on the NASDAQ Stock Market and specialists on the New York Stock Exchange (NYSE).forex trading


Extended hours trading takes place through electronic communications networks (ECNS). These systems automatically match buy and sell orders. An ECN is not a physical "bricks-and-mortar" exchange; it's all done by computers. If you want to buy a security at a certain price and someone else wants to sell that same security at that price after hours, the ECN matches the two orders automatically and completes the trade.



What are the extended trading hours?

We offer extended hours trading from 7 a.m. to 8:15 a.m. Central time, and from 3:15 p.m. to 5:30 p.m. Central time each business day. Hours will differ when the exchanges open or close early. You can only place extended hours trade orders while the extended hours trading window is open.



Why is American Century Investments® brokerage offering extended hours trading?

Extended hours trading is another way we can provide you with more efficiency and convenience. Large institutional investors, pension fund money managers, and mutual fund managers have long had access to extended hours trading. We are leveling the playing field by giving our customers access to the same extended hours opportunities.
 
Extended hours trading is a waste of time, the spreads are gigantic, the volume is even more pathetic and you can only use limit orders, they should just shut it down all together. Take away the pre-market and after market trading and give us a real 8-10 hour trading day, enough with the 6.5 hour trading days, this isnt 1974 or 1989, its 2010.
 
If you want to sell and see that bid on an ECN best thing is to route your order to that ECN and it should fill unless someone hits it before you do
 
I understand what extended hours is all about, and about the only time I ever used it was when GTC limit orders to close a swing trade were lifted. I was just curious how trades occurred outside the bid/ask. About a year ago my husband had a GTC order in place to close an AMGN swing trade and it was lifted after hours at a price 1.00 lower than the best bid.

Rabbit, thanks for the explanation, which pretty much answers my question.
 
Sometimes I observed that... the only time that is worth trading after hours - BUT IT IS VERY RISKY! - is after the companies release their quarterly numbers. For example, I have seen AAPL ran up very rapidly after the market closed. Something like $5 in after hour trading. Some were very lucky getting in early (maybe some stop-limit buy orders). The folowing day, AAPL gapped up $8 or something like that (so holding overnight takes the $3 gap).
 
6.5 hours is more the enough
8-9 hours? what exactly are you looking for?

The most important times to put in a trade are
9:45 -> 11
2:30 -> 4:00

why would you need 9 hours a day in the market when news isn't happening.
Stock prices move only when there is a change in supply and demand.
Supply and demand isn't going to change all 9 hours of the day, In fact it takes days or weeks for it to change
 
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