Incorporating after-hours trading into your investment strategy is perfect as it frees up some time for trading. How can your broker help you? The following is how after-hours trading can work for you.
- Check on the terms that your broker has for managing after-hours trades from 4 pm to 8 pm through most services. This is great if you’re in the Pacific Time zone and you might not be able to get access to the market starting at 6:30 am local time. Brokers have their own rules for after-hours trading. Wells Fargo allows for trades up to 5 pm. TD Ameritrade trades up to 8 pm, but the trading period does not start until 4:15pm. Some pre-market trades may also take place. These include trades that start as early at 6 am. Not all brokerages will allow those trades to take place.
- Review the added fees associated with after-hours trading. An added fee of 0.005 cents per share might be added to your trades if they are after-hours. This could be expensive depending on how large your trades are. Factor this total into your investment plans.
- Review general stocks on the market and see if they are available for trading. Not all stocks on the market can be traded after-hours. You might have certain limits as to what you can do. Individual stocks can file with the SEC to request that they not participate in after-hours trades. This is not common although some more expensive stocks might insist that they not be traded after-hours.
- You should get any orders you wish to place arranged as soon as possible. Not all brokerages have the employees on hand to place those orders. This means there could be a delay in completing your trade.
There is one thing of interest to take a look at when seeing how a stock might develop and evolve. When you look at a stock report, the stock might have a lighter series of bars after-hours. This suggests that the value is changing but it is not making as much impact as what happens during regular hours. This does not mean that the after-hours period is not important. The chances for a stock to change in value can make a real difference, but most people are not going to be concerned at this point. Do not feel as though that trading period is insignificant because the stock is not as noticeable as you might see on a chart.
