After-hours trading

After-hours trading is the session that follows the regular US market close at 4:00 p.m. ET, typically running until 8:00 p.m. ET, during which stocks trade electronically with lower volume and wider spreads.

How it works

After-hours orders execute through exchange order books and alternative venues, but most brokers accept only limit orders and restrict order types such as stops. The official closing price is set by the closing auction at 4:00 p.m., so after-hours trades do not change the day's close, though they appear in many quote displays.

Many companies release earnings shortly after the close, followed by an earnings call around 4:30 or 5:00 p.m. ET. Merger announcements, guidance changes and offering news also often arrive after hours, partly to give investors time to digest them before the next session.

Why it matters for traders

The biggest single-stock moves of the day often happen between 4:00 and 5:00 p.m. ET during earnings season. Prices can swing sharply as the press release lands, again as investors parse guidance, and again during the call.

Things to watch:

• Liquidity. Bid-ask spreads can be several times wider than during the day, and small orders can move the price.
• Reversals. An initial spike on a headline earnings surprise can fade once guidance or margins are read.
• Next-day gap. After-hours moves feed into pre-market trading and the next day's opening gap, but they do not guarantee it.
• Offerings. Small caps that ran during the day sometimes announce stock offerings after the close, which can reverse gains overnight.

Example

Hypothetical Copperline Energy (ticker CPLE) closes at $30.00. At 4:05 p.m. ET it reports EPS of $0.62 versus a $0.50 consensus and trades up to $33.00, a 10% gain. On the call it cuts full-year guidance, and by 6:00 p.m. it trades at $28.50, down 5% from the close.

FAQ

What time does after-hours trading end?

Most US exchanges run the after-hours session until 8:00 p.m. ET. Some brokers offer overnight sessions beyond that.