After-Hours Market

After Hours Trading

The practice of trading a security after an exchange has closed. After-hours trading occurs over-the-counter, but both listed and unlisted securities may be traded. After-hours trading is often less liquid than regular trading because participation by market makers is voluntary, whereas market makers are required to serve as a counterparty for a security during trading hours. The price of a security in after-hours trading may influence is price on the next trading day. The practice is less commonly called extended-hours trading.

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After-hours market. Securities, such as stocks and bonds, may change hands on organized markets and exchanges after regular business hours, in what is known as the after-hours market.

These electronic transactions explain why a security may open for trading at a different price from the one it closed at the day before.

There's also trading in benchmark indexes such as Standard & Poor's 500 Index (S&P 500) and the Dow Jones Industrial Average (DJIA) before US stock markets open. The level of activity and the direction the trading -- up or down -- is widely interpreted as an early indicator of what's likely to happen in the market during the day.