After hours trading price fluctuations?

Question

I bought some apple stock which has been quite good to me in the last few months. I was watching the ticker quite a bit today as apple took a nice little nose dive. Just checked the price at about 5:30, after hours, and it showed the stock went up over 3 dollars in after hours trading. I was very happy to see this, but then the next change in the ticker on yahoo finance showed it trading at -.05. How can a swing of 3 dollars on a stock after hours happen instantly. Was this a fluke? How can after hours trading have such large and instaneous price fluctuations, what going on here?

Answer 1

After hours trading is a crossing market. They simply make matches based on criteria. If you say I want 1000 shares at $33 (all trades are limit orders) and it closed at $30 then you are simply giving away money. There is no after hours market maker either you match exactly or you don't fill.

Answer 2

It is normal, after hours are extremely illiquid. People mistakenly enter "market" orders not realizing that it doesn't work the same way as when a market maker is managing the price. So, if you enter a market order someone else can enter a limit order at any price and it might be filled even if it is very far away from the market. That is very common, the person who entered the limit order for the 3 dollar above market sell was a very happy person because they may well have bought the same shares back at 5 cents below market later. It would be a riskless 3.05 per share too.

Answer 3

Generally, for stocks to plummet there is an underlying reason for that - in most cases, company reports bad profit and revenue results. This announcement happens in after hours trading, so that's why you see stock loosing value. This is the best indicator for what will happen in regular trading. In regular trading, if the price of the stock is unchanged, then it doesn't matter if the price was down -10% in after hours trading. But most likely, if the after hours trading goes bad for the stock, the regular trading will also go bad. So the next day you will be able to sell the stock.

Answer 4

it happened with me many times. It is a normal thing though. Some of the huge transaction were swamping the other buy/sell transaction but the supply/demand market then balance this fluctuation when the trade begin. Many poeple post their orders "after hours" and when the market start to trade, in a second, all the transactions posted after hours trading will be settled immediately.

Answer 5

The advantages of trading Currencies over Stocks

Stocks
-8 hours day, 5 days week
-Profit in rising markets only
-High Commission Fees
-Investing in Companies
Can be Manipulated (Enron, Worldcom)
-8,000 Stock to choose from
-Leverage 2 to 1 (trade $1,000 with only $500)

Currencies
-24 hours day, 6 days week
-Both Rising and Falling markets
-Much lower Commissions
-Investing in Countries
-Too Large to be Manipulated
-Only 6 major currencies
-Leverage 400 to 1 (trade $200,000 with only 500 out of pocket)

Answer 6

Make a long story short, the afterhours markets are not nearly as liquid as the business hours markets, hence, a large transaction will fluctuate the price considerably.

Answer 7

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