Find Stocks That Are Volatile And More With After-Hour Trading
If the earnings reports and new releases are done by the company after the bell has rung, huge attention is drawn which lead to the creation of volatility and volume both as there is a reaction to this news by the traders. Aftermarket closes is the time when the occurrence of a lot of such company earnings happens. This will provide a chance to take an action on this news as soon as it happens rather than waiting until the day that trading will start next day. Cryptocurrency can also be traded after hours using this source. A list of stocks is provided by the calendar so that opportunities that will occur after hours can be watched by the traders.
The way that you can manage to trade in after-hours trading is by noting down all the stocks in the daytime and then shortlist the stocks and select the stocks that can be easily managed to do trading. You can filter to shortlist the stocks that have a daily volume that is average lower than 1 million shares. During 9:30 a.m. till 4:00 p.m. EST which is a regular trading hour, if the shares will not have notable volume, it is not possible to have notable volumes after the trading hour bell either. It doesn’t matter whether the new release is huge or not, still, the volume will not change.
Risks Involved in After-Hours Trading
- Liquidity is less- There are way more people who want to buy and sell stocks during the regular trading hours. On the other hand, when it is an after-hours trading session, the stock might have less trading volume, therefore, converting the shares into cash will be difficult during this time.
- Broad spreads- The spread in the middle of a bid and asks prices will be wide because the trading volume will be low. This will lead to difficulty in executing trader’s order at a price that is beneficial.
- Competition is strong among individual traders- Since individual trader has a chance to do trading in the market that runs after-hours, here is the truth, at this time they should engage in competing against huge institutional investors. It is tough to compete with them because they have accessibility to a lot of resources in comparison to the normal individual traders.
- Volatile in nature- When compared to trading during normal hours, trading in the after-hours market is done in a thin manner or thinly traded, hence, this type of trading might lead to experiencing serious fluctuations in price.