The stock market has stipulated trading hours, mostly from 9:30 a.m. to 4:00 p.m. During this period, billions of investment products are traded, making this system very efficient, and highly liquid.
What novices may not be aware of, is that it is possible to trade even after the regular time. This is referred to as post-market trading. This allows traders to transact beyond the stipulated time of closing.
In comparison to the regular time, only a portion of the billions is transacted in the post-market session. This makes the market riskier and with less opportunity. However, to some of the traders, they consider that most of the veteran, and highly skilled, traders have closed for the day; thus, competition is lower. With excellent research and a good analytical brain, a profit can be made in this session.
Other than individual traders, companies use this post-market, to pass information that is important, strategically. Many organisations would prefer to announce the outcome of the trading period at this time because the effect is not adverse. If a company announces a loss at the regular time, it may result in a massive move out of stock, resulting in sporadic unwarranted losses.
As much as the effect of such a reaction will result into a similar outcome, it is better; by the time the market opens the next day, traders would have gone through the entire report, hence preventing a false alarm.
For traders to transact in the post-market, they must first check with their brokers, to ensure that they have access to the after-hours market. It is common for brokers to allow partial access to the aftermarket, or even just specific networks, making trading slower than at the regular time. The bottom line is, post-market trading only favours traders who want to profit from the anticipated news.