Investor Bulletin: 

After-Hours Trading 

 www.investor.gov

The SEC’s Office of Investor Education and Advocacy 

is issuing this Investor Bulletin to help educate 

investors about after-hours trading for stocks. Afterhours trading, also known as extended-hours trading, 

refers to trading that occurs outside of regular trading 

hours. Regular trading hours for stocks traded on 

exchanges and certain other markets are from 9:30 

a.m. to 4:00 p.m. Eastern Time. After-hours trading 

sessions may occur before or after regular trading 

hours. The duration of after-hours trading sessions 

varies between markets and trading venues. Investors 

should contact their brokerage firms to determine if 

and when after-hours trading sessions are available.

Overview of After-Hours Trading

Investors should be aware that the rules governing the 

various markets and venues that conduct after-hours 

trading vary and may differ significantly from rules 

that apply during regular trading hours. Differences 

may include the types of orders accepted for afterhours trading, the securities that are available to 

trade, the presence or absence of market makers, and 

rules designed to protect investors from poor prices. 

Investors should contact their brokerage firms to 

determine the specific rules that apply. 

After-hours trading takes place within computerized 

trading systems, informally known as “electronic 

markets,” that operate beyond regular trading hours. 

These “electronic markets” may include, for example, 

alternative trading systems (ATSs) and electronic 

communications networks (ECNs) (both operated by 

broker-dealers), or exchanges and other markets with 

electronic trading platforms. 

After-Hours Trading Risks

While after-hours trading presents investment 

opportunities, investors should consider the following 

risks before engaging in after-hours trading:

•	 Order Handling. Some rules that apply to the 

handling of orders during regular trading hours 

do not apply to orders in after-hours trading. 

Investors should check with their brokerage firms 

to determine how orders placed during afterhours trading are handled, including the markets 

to which the firm routes orders and whether 

or not it seeks to route each order to the best 

displayed price. 

•	 Lack of Liquidity. Liquidity refers to the 

existence of buyers and sellers who are willing 

to trade with incoming orders and the degree of 

price competition among buyers and sellers. A 

lack of liquidity can affect an investor’s ability 

to quickly buy or sell stock with a minimal 

effect on the stock’s price. During regular 

trading hours, buyers and sellers of most stocks 

rigorously compete on prices to attract trading 

interest. However, during after-hours trading 

Investor Assistance (800) 732-0330

1
there generally is less trading interest and less price 

competition for most stocks, which may raise 

trading costs, increase uncertainty with respect 

to prevailing prices, or make it more difficult to 

execute trades. There may be no market makers 

actively making markets in most or all stocks. In 

fact, some stocks may not trade at all during afterhours trading.

•	 Larger Quote Spreads. The reduced level of 

trading interest in after-hours trading generally 

results in wider spreads between the bid and ask 

prices for a stock or no quotes at all. As a result, 

investors may find it more difficult to get their 

orders executed or to get as favorable a price as 

they could have during regular market hours. 

•	 Price Volatility. For stocks with limited 

trading activity, investors may find greater price 

fluctuations than they typically would see during 

regular trading hours. 

•	 Uncertain Prices. The prices of some stocks 

traded during after-hours trading may not reflect 

the prices of those stocks during regular hours, 

either at the end of the regular trading session 

or upon the opening of regular trading the next 

business day. 

•	 Requirement of Limit Orders. With respect 

to after-hours trading, many brokerage firms 

currently accept only limit orders in order to 

protect investors from unexpectedly bad prices. 

Limit orders can be executed only at the limit 

price or better. If the market moves away from 

the limit price, the order will not be executed. 

•	 Order Time Limit. Investors should check 

with their brokerage firms to see whether orders 

not executed during after-hours trading will be 

cancelled or whether they will be automatically 

entered when regular trading hours begin. 

Similarly, investors should also check with their 

brokerage firms to see if orders placed during 

regular trading hours will carry over to after-hours 

trading.

•	 Competition with Professional Traders. 

Investors should note that many of the after-hours 

traders are professional traders who, by nature of 

their profession, generally have access to more 

information than individual investors.

Related Information:

For additional educational information for investors, 

see the SEC’s Office of Investor Education and 

Advocacy’s homepage. For additional information 

relating to the types of orders investors may use to buy 

or sell stock, please read our investor bulletin “Trading 

Basics.”

Investor Assistance (800) 732-0330 May 2011

2

The Office of Investor Education and Advocacy has 

provided this information as a service to investors. It 

is neither a legal interpretation nor a statement of SEC 

policy. If you have questions concerning the meaning 

or application of a particular law or rule, please consult 

with an attorney.