What does it mean when the market opens and closes, and then there is also "After Hours Trading"?

Question

Can someone please explain to me the difference between after hour trading and buying and selling stock during the market hours?

Thanks for the help!

Answer 1

Forget explanations about when other markets are open. If markets are open then you are trading during their "market hours". You do not have to trade on an organized exchange at all.

There are Electronic Communications Networks, which are computers that match buy and sell orders among their customers without going to a normal exchange. These ECNs start earlier and end later than the regular exchanges as well as run during normal market hours.

ECNs were created for dealers/market makers and big institutions that wanted to be able to react to breaking news announced outside of normal market hours as well as solve some complicated technical liquidity problems that arise with trading large blocks of stock.

Some retail brokers have systems which allow the little guy to join in. Here is one example and the broker's explanation:
http://www.schwab.com/public/schwab/investment_products/stocks/extended_hours_trading?refid=P-1062828&refpid=P-997323

Also, some brokers allow some of their customers to have direct access to the ECNs. I had to sign special releases and get management approval and prove that I was an extremely experienced trader in order to get this, because there are limited safeguards in the system and an amature can get himself into exxpensive trouble by routing his own orders and doing it wrong.

Answer 2

Market hours for the New York Stock Exchange, American Stock Exchange and NASDAQ market, all based in New York City are 9:30am to 4:00pm eastern standard/daylight time. As stocks listed on these exchanges can also be listed on many other exchanges around the world (open when NYC is "sleeping"), if they trade when New York is closed, it is considered trading "after hours."

Answer 3

Specialists / market makers must maintain an orderly market in securities during market hours which means they may have to step in and buy or sell for their own account to match incoming orders.

They are under no obligation to do it after hours. They simply match orders from buyers and sellers that must be limit orders only.

Answer 4

As The Major Stock Exchanges in Tokyo, Hong Kong, London and New York etc, are open and closed at different times.

Big international companies can and are traded, After Hours !