HOW TO BUY STOCKS AFTER HOURS
You might be wondering how to buy and sell stocks after hours when the markets are closed. Can you actually make a trade online after hours before the market opens or after it closes?
For some elite organizations there is actually after hours market trading available. But for the nomal person like you and I, actual trades cannot be made unless the market is open. That doesn’t mean you can’t place a trade online though.
If you want to put in a trade order for the next morning, all online brokers will let you place your trade and it will go through once the market opens. Just like any other trade, you can specify what stock you want, how many shares you want, the highest price you are willing to pay, and pretty much anything else you can specify while the market is open will be available to you after hours. You can do limit orders and short sells to but you will have to specify whether you want the trade to take place at the market’s open or when a stock hits a certain price.
Is it a good thing to place your orders after hours and always have the trade made at the market’s open? Some analysts believe this is a bad thing because they believe that over the course of a long time period, the market opens higher than it should based on optimism for a new day. But again, for a regular investor who has some money to invest, it seems buying at the markets open is just fine. You don’t want to make stocks for beginners too hard and too confusing.
Stock analysts can debate till the end of time when is the best time to make a trade or how to get a quarter of a point better for each trade or whatever analysts debate over their beers. However, you shouldn’t be buying a stock in the first place if you are worried about a quarter point here and there. Any stock you buy should be bought for a reason and you should see upside potential of many points otherwise it wouldn’t be worth buying.
Buying stocks online after hours just means that you have made the decision and you want to buy the stock no matter what at the open. The only time you can get into real trouble with this is when something happens overnight to a company you wish to buy. For instance, say you live on the west coast and place an online order for a stock at 9 PM at night and go to bed. Later that night there is a fire at one of the plants of the company you wish to purchase and a whole processing plant burns down. Now obviously, this changes the picture greatly and the stock will open way down in the morning from its closing price the night before.
More importantly you may not wish to buy this companies stock anymore and would rather sit on the sidelines for a while to see what happens. Since the market opens at 6:30 AM Pacific time on the west coast, you might not get up in time to read about the fire and stop your order. Thus you will have bought shares in a company that you no longer really want and it was all because you placed the order online after hours. This is for sure one of the bad points of buying stock online after or before the market opens.
Buying stocks for the first time will include sooner or later placing orders after hours to be executed the next morning. It is very convenient and that is why people do it even though it might be a bit more risky than placing them when the market is open.
