Are you tired of waiting for the opening bell to ring before you can start taking advantage of the information you've learned about your stocks and securities? Trading in the out-of-hours world could be the easiest way to take your strategy to the next level. However, just like any other campaign for investing and using your money wisely, it's important to make sure you know everything there is to know about the out-of-hours sessions. 

Perhaps the first question you'll need to ask yourself is "what is premarket trading?" This refers to the period of time before the official market bell rings, when you can trade and sell stocks or securities before the general public swarm in. While anyone with the right broker can try this strategy, it's not a process for the faint of heart, as it often involves greater risk and higher volatility. 

The other question you'll need to ask is "what is after hours trading?" That phrase refers to the trading sessions that investors and stock market experts use after the closing bell rings, to make sales and acquisitions late at night. Just like premarket trading, afterhours sessions suffer from reduced volatility and stock volume. 

Premarket Trading vs After Hours Trading 

Depending on your broker, premarket trading sessions can start anywhere as early as 4am, and run all the way up to the point where the opening bell rings at 9:30 am EST. On the other hand, if you're more interested in working with your stocks after-hours, then you could start at 4:30pm and trade up until 8pm EST with most brokers. Out-of-hours sessions are only available through ECNs and dark pools in the brokerage world. This means that you need to make sure that your broker can actually handle this kind of trading before you sign up with them. While there's no specialists or market makers posting quotes for the premarket or afterhours market, they can participate through ECNs to prepare for the impending regular opening times. 

Depending on who you ask, the premarket sessions may be less risky than after-hours trading, because the action continues into the regular market at 9:30 am. This means that if you make a mistake with your choices, you can potentially get out of the bad position as quickly as possible. However, because the afterhours environment closes at 8pm in most environments, you may end up trapped in a position that you can't get out of until the next day.

When Should You Trade?

Whenever you choose to buy or sell stocks outside of the regular hours of the NYSE, you're putting yourself in a position which comes with less liquidity, reduced volume and potentially higher risk. However, despite this, there are benefits to early and late trading, because they allow you to take advantage of what you've learned in the news before anyone else. If you've done your research and built a strategy that you know you can rely on, then trading out of hours might allow you to make some extra cash over your competitors that wait for the bell to ring. However, it's important to know exactly what you're getting into with this kind of strategy.