Ask TheStreet
Will I Get Burned in Extended-Hours Trading?
This lack of liquidity results in a wider spread between the bid and ask prices (the prices at which someone can buy and sell their shares), as well as an inability to buy or sell a large number of shares without moving the market.
Example: Selling Wal-Mart 'After Hours'
To give an example of how the extended market works, if an individual puts in an order to sell shares of Wal-Mart (WMT) at $47.25 and there is no opposite order to buy shares at the same (or higher) price, then the order will not be filled. While this is similar to what happens during the daytime market, let's say that the last trade for WMT occurred at this $47.25 price during extended-hours trading, and because you saw WMT close at $46.50 today (i.e., WMT's closing price) you think, "Hey, that's a good price to sell at." So you put in an offer ("after hours") to sell 100 shares, and the trade goes through because someone else had a $47.25 bid. Now at that moment, you may think that you made a good sale, but when the market opens again, shares of WMT are trading at $49. How could this happen? Because the majority of buyers and sellers do not participate in the extended-hours market, the extended-hours price is often not a fully accurate representation of how most of the investor population is valuing a stock. While this WMT scenario is just an example, it does a good job of illustrating why most investors are better off executing their trades during normal trading hours.TheStreet Premium Services
Jim Cramer's Action Alerts PLUS:
Trade right alongside a Wall Street pro — enjoy access to his Charitable Trust portfolio and be sent trade alerts BEFORE he makes a move. Learn MoreOptionsProfits:
Get 50+ trade ideas a week from the industry's top options experts. Plus — exclusive commentary on market trends and essential trading tools. Learn MoreReal Money:
Our team of professional Wall Street Pros — including Jim Cramer, Doug Kass, and Nicholas Vardy — delivers intelligent analysis, timely trade ideas, and colorful commentary. Learn MoreStocks Under $10:
Break into the market with small- and mid-cap stocks... all $10 or less! David Peltier tells you exactly which low-priced stocks he's buying and selling. Learn MoreTo begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
blog comments powered by Disqus
| Dow Jones | S&P 500 | NASDAQ | 10-Year Note |
|
|---|---|---|---|---|
| 12,393.45 | 1,310.33 | 2,827.34 | 15.81 |
Oil *
101.78
|
|
DOWN
26.41 |
DOWN
2.99 |
DOWN
10.02 |
DOWN
0.44 |
10 Yr
1.58%
SPDR Gold
151.62
|
|
-0.21%
|
-0.23%
|
-0.35%
|
-2.71%
|
Data delayed 20 minutes |


Connect with TheStreet