Can someone explain how pre-market hours and after hours trading works?
Like take a look at this list
http://www.nasdaq.com/extended-trading/premarket-…
how is there trading going on before the market is even open? Could someone explain it to me like I'm a four year old?
Lots of brokers and private ECNs offer a market in shares before the NASDAQ or NYSE open. The trades can be executed in these markets before the big boys open up, but the quotes need to be reported to the relevant exchanges.
Example: I am a mutual fund and call up Goldman at 7:30am and say "Hey - I need to be out of position X before the market opens this morning." Goldman says "Ok - here's a price we can give you for X." We make the trade. X stock is listed on the NASDAQ, so Goldman has to report the executed price to NASDAQ who will run this in their pre-market trading quotes.
this
I used to trade in the pre-market (8am untill 9:30), but the order depth wasn't all that (unless it was BAC, F, C, SIRI, etc.) I didn't report the trades to NYSE or NASDAQ, since the market is open to build order depth and give an indication of opening trades.
No big deal, just a hassel due to no algo trading in the pre- and aftermarket.
Edit: If a client wanted to get out of a position after market close, I'd have to talk to our market maker desk and get the green light (he sets the price, usually a VWAP OTD or closing price.Whichever is lowest) and I'd report it to the exchange.
SO confused about pre-market trading/futures/after markets (Originally Posted: 08/25/2015)
I was hoping if someone could please explain to me what it's meant when "Dow Futures are trading higher this morning" means? I know the futures exchange is in Chicago but I am pretty sure it opens up at 8:20 AM EST... but how come when I listen to the financial radio in the morning, it is already talking about futures markets at like 7 AM EST? This gets me really confused.
Also, if someone could just explain pre-market/futures/after markets trading..that would be really helpful. Not sure how you can "trade" a stock after the market closes.. but sometimes I will look at when a big company releases earnings after the bell and the stock either jumps or drops a ton, despite the market being closed.
This is probably the simplest but pretty good explanation of it.
http://www.investopedia.com/financial-edge/1112/trading-in-the-pre--and…
Also as far as the futures go, their market is open 24 hours a day with a 15 minute break at 315. (Chicago time, so 415 EST)
http://www.cmegroup.com/trading/equity-index/us-index/e-mini-dow_contra…
Globex is 24hrs minus maintenance after the 4:15 close. Closes Friday at the bell and opens Sunday night.
i would HIGHLY suggest you open a retirement account at TD Ameritrade, and use thinkorswim to watch the futures markets (its free) just to get an idea of how the markets move (/ES, /ZN, /CL, /GC are a good set of futures tickers to get you started - S&P 500 futures, 10yr US Treasury futures, Crude oil, gold). At the least, try paper trading (not using real $$...its pretend, but for a wannabe trader its the best game you can play, and the price quotes are both free and real).
How does after hours trading work? (Originally Posted: 04/18/2008)
This may seem like a dumb question, but nobody has ever explained it to me.
I never understood after hours trading. Isn't the point of the market closing that stocks do not trade until the market re-opens the next day? If you're going to allow after-hours trades, why not just keep the market open until 6pm (or whenever after-hours trading stops)?
Are these after hours trades actually executed on the exchanges, or just queued up for the next morning? Am I correct in assuming that the people executing these trades are generally large investment banks and funds, not individual investors?
It will explain everything. But, there is an electronic system that matches up buys and sells as much as it is able and there are limits to what can be done after hours.
by no means am i an expert, but i believe the after hours trading is used to facilitate large transactions made by the aforementioned entities; additionally, they include mutual funds, pension funds, etc. its my understanding that they utilize those hours to make huge transactions that could potentially affect the open market price during conventional trading hours.
any insight from those that might know better?
Interesting question.
In this age of fully automated trading, is there any reason why markets can't just stay open 24/7 (with no limits)?
Thus begins the 168 hr work week
A gallon of milk's price doesn't change much in the same day.
That still doesn't explain why the market can't stay open 24/7.
I think he meant it to explain why work hours are longer in finance than at grocery stores - things are always changing, and changing rapidly.
Uh? OK, yeah, everyone knows that. Which is why brick's comment wasn't very helpful.
By the way, I'd still really like to know why we don't just have 24/7 markets... the only rationale I can think of is to say that we already have 24/7 markets, kicking off the day in Asia, handing over to London, then to the US. But even so, why not just keep every exchange open 24/7?
It's probably risky to have all markets open 24/7. I'm sure someone can expand on this point, and I know there's some truth in it somewhere.
Also, the market closing probably gives everything time to settle down. I suppose having 24/7 markets and constant trading could result in price instability?
I don't know, I'm just throwing stuff out there, but let's keep this debate going..
Here's another thought - it may be a function of convention. In older days, before electronic trade clearing, etc, I'm sure the markets needed a break at night to settle accounts, clean the trading floor, etc and prepare for the next trading day.
Is it possible that our markets open and close when they do only because that's the way it's always been done?
Transatlantic, are you really advocating equity market be open 24/7? Do you realize how much burden traders already have? While we have the ABILITY to have a 24/7 market that doesnt mean its right. Think about it the market is a business and business' have hours. I mean index futures trade nearly 24 hours a day.
"Oh - the ladies ever tell you that you look like a fucking optical illusion?"
I'm not saying anything about how long traders would need to work. Instead, I'm trying to find out why markets don't open up 24/7. Presumably, if markets were open 24/7, there would be two or more shifts of traders, and the night shift would probably be small and wouldn't do very much work. (So 24/7 trading could actually reduce trader workload... but I don't know much about trading as I'm in M&A.)
The fact that a lot of after hours trading goes on clearly shows that demand exists for markets to stay open longer than is currently the case. Almost any other business would stay open longer to accommodate this demand. Why don't exchanges stay open longer? Answers suggested so far include:
The market, when open, operates via different traders working for themselves and their clients standing around at stations with a specialist keeping an orderly market. In after hours trading an electronic system matches up big orders, eventually it could be made to operate like a person, but it doesn't and doesn't have enough information to operate that way.
Anyway, the incremental benefit to more time trading is negligible. The fourth market operates at all times, so people trading in truly big amounts will always be able to trade at any time and price they feel. Jane Doe dentist doesn't need to be able to trade at 2 am, in fact she probably can't because she is buying odd-lots.
Not all stocks use a specialist system. NYSE and AMEX stocks use a specialist system, and even they kind of use a hybrid electronic system. NASDAQ stocks do not use a specialist, they trade Over the counter via market markers.
"Oh - the ladies ever tell you that you look like a fucking optical illusion?"
PowerMonkey, could you please stop telling me/us to take the Series 7. I'm not a trader (or dealer or broker or whatever), I don't intend to become a trader, I'm not employed in the United States, and I don't see why I should have to study for several days and take a six-hour exam to get an answer to what should be a relatively simple question.
Also, I don't buy into your explanation involving "specialists keeping an orderly market", because as trade4size says, this might apply to NYSE/AMEX, but it doesn't to NASDAQ. So why not keep NASDAQ open 24/7? Well, here I am inclined to agree with PowerMonkey that "the incremental benefit to more time trading is negligible". If it were sufficiently beneficial then the exchanges' customers would have already gotten the exchanges to remain open longer.
Well, you have to be sponsored to even sit for the Series 7, and to be frank, I've forgotten most of what's on the 7.
Im sitting here in class and doing more posting than listening about autocorrelations in errors.
In general from my experience with equity traders is, the market closes and they get ready to go home. This allows the dust to settle and prepare for the next day. Also one thing that hasnt been considered is the impact of significant news. For example earnings and a large number of economic reports are issued outside of market hours. Im just going to stop my argument here. I dont think equities will ever see a true 24 hour market. Given that index futures already nearly trade 24 hours a day and there is very little activity relative to when the market is open this shows there simply is less demand for this.
I really need to stop ranting on wso.
"Oh - the ladies ever tell you that you look like a fucking optical illusion?"
http://www.invest-faq.com/articles/trade-after-hours.html
Thanks, very interesting article.
ahhh, if we never slept, there would be no tomorrow. think about that.
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