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[quote=Anonymous]It works like when the market’s open, except bid-ask spreads can be much wider and in general much less liquid. If the stock market, on a given day, is a giant bazaar where buyers, sellers, and middlemen meet to trade their wares, after hours is the same except instead of 100 buyers/sellers/middlemen trading the same thing (during regular hours) you might have 2-3, and those could be some of the most saavy and aggressive of the traders. So you don’t want to walk in and say “I have some camels to sell and will take your best price” because super saavy Sulemain who normally has tons of competition is the only one bidding for your camels and he knows it, so he will pay you less if you tell him you’ll take whatever price. . Now if you happen to know that the going rate at the bazaar was 10 bags of dates and you would be okay with that price, you can tell Sulemain that you will accepts 10 bags of dates and see if he still wants your camels, and you’ll be no worse off trading after hours than in the normal market. For a big stock like AAPL or AMZN on earnings day, you could still have 100’s( or 1000’s) You should only trade AH if you have a reason. You may think that a stock hasn’t properly reacted to news that has come out and want to be the first to trade it (this is generally not a good reason) or a stock may hit your buying/selling price after earnings/other news in the pre market / after market and you can just buy/sell as you would during normal market hours. Always always always use a limit order. Or else Sulemain will get your camels for a low price![/quote]
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