What is After Hours Trading: Importance, Benefits & Risks

The National Stock Exchange of India (NSE) and the BSE, originally known as the Bombay Stock Exchange, are the two main stock exchanges in India. These two marketplaces are open daily from 9 AM until 3:30 PM. Within this time period you can trade stock from your broker platform.

While regular trading takes place during these hours, traders can also trade orders through after-hours trading after the markets close. Orders for the purchase, sale, delivery, or receipt of commodities or securities may be placed at any time between 3:45 PM and 8:57 AM on the following trading day. The designation "After Market Orders" (AMOs) is given to these orders. As soon as the market opens the following trading day, these orders are released. 

What are after-hours trading timings in India?

By 3:45 PM, the BSE as well as NSE had closed. The following day, at 9 AM, they reopen. Between the time the market closes and when it reopens the following day is when after-hours trading occurs. When putting the AMO too near the opening time, you must be cautious. 

For BSE, after-hours trading occurs from 3:45 PM to 8:59 AM if one does want to trade stocks. The same hours (3:45 PM to 8:57 AM) apply to NSE.

AMOs must be placed for currency trading during 3:45 PM and 8:59 AM. The after-hours trading for derivatives, such as options and futures, occurs during 3:45 PM and 9:10 PM

Why is after hours trading important?

Investors have the ability to trade after regular market hours thanks to after hours trading. This may be crucial for a variety of reasons, including responding to information that was disclosed after the exchange had closed or making the most of a pre-market occurrence. Investors can also respond swiftly to worldwide news and events that might affect the Indian stock market. For traders who might be unable to participate during regular trading hours owing to work or other responsibilities, trading after hours can be especially crucial.

How do I place an order for after-hours trading?

Shareholders must have an account with a brokerage firm that provides extended hours trading in order to place an order for after hours trading. Investors should ask their broker to see whether they provide after-hours trading because not every brokerage firm provides this service. Amounts in the account must be sufficient for the investor to put in an order. Investors are able to make an order via the internet or through a broker once the account has been created and funded.

Benefits of Extended Trading Hours

Better Flexibility: Expanded trading options give investors the freedom to transact outside of usual market hours, enabling them to respond to current events as well as other events that could affect the market.

Access to foreign markets: After hours trading enables investors to respond swiftly to news and events happening abroad that might impact the Indian stock market.

Reduced competition: The market is less active after hours, which can lessen competition and possibly result in better prices.

Risks of After- Hours Trading

Lesser liquidity: The market may have lesser liquidity during after hours trading because there are fewer traders present. As a result, it could be more challenging for purchasing and selling stocks at the prices you want.

Increased volatility: Because there are less traders in the market during off-peak hours, after-hours trading may be more erratic than during regular trading hours.

Limited information: It may be more difficult to arrive at informed decisions during after-hours trading because there may not be as much information available.

Greater risk: Because there are smaller investors in the market, trading after hours can be more dangerous, particularly for novice traders who might not have the same amount of knowledge and experience as more seasoned traders.

Conclusion 

Investors have the ability to trade after regular market hours thanks to after hours trading. Investors may find it useful as a tool to respond to sudden developments and other events that could have an influence on the market. Risks, including decreased liquidity and more volatility, are present, though.  

As you have learned about “What is After Hours Trading '' and its application, you must look out for the above points, before choosing to engage in after-hours trading, investors should carefully weigh the advantages and risk. Opening a trading with a broker such as blinkX which can make your trading simple and equipped with advanced trading features.