It’s a free country, for sure. But that doesn’t mean you can buy and sell stock any time you want. At least, not on a stock exchange.
And while that has changed somewhat with the advent of computer-driven after hours trading, the major stock markets continue to maintain rigid trading hours.
The Major Markets
The New York Stock Exchange, the NASDAQ exchange and the American Stock Exchange all maintain the same trading hours: 9:30 to 4:00 eastern time. They do observe recognized holidays, in accordance with the closure of US government and municipal offices.
However, today it’s possible to continue trading on an after-hours basis. This format is similar to what used to constitute the “over-the-counter” market, which before NASDAQ included all non-listed stocks. Today these stocks are traded over the NASDAQ system in a manner almost identical to the systems used on the New York and American exchanges.
The New World of NASDAQ
Prior to NASDAQ, though, and today relative to after-hours trading of both listed and non-listed securities, investors can buy and sell online in much the same manner as listed trades during normal operating hours. In this case they are trading not with a “brokered” arrangement that matches buyers and sellers, but rather, by buying and selling directly from a dealer’s inventory of stocks. The price is set by supply and demand, and controlled by the dealer’s meeting of bids and asking prices from their own inventory.
NASDAQ “makes a market” on an after-hours basis from 4:15 to 8:00 pm eastern time, with virtually an identical system as during business hours. Investors use the prices of these after-hours trades as an indicator the nature of the next trading day. NASDAQ reports the Top 100 of their listed companies on an after-hours basis, though it makes a market in any of the stocks it represents.
