The stock market regulator Securities and Exchanges Board of India (SEBI) allows trading of financial securities in the market even after the market closes for regular trading. This kind of trading starts after the market closes and continues until it reopens the following day.
What is after-hours trading?
After-hours trading is the process through which the investors are authorised to participate in the trading of their financial portfolios post the actual trading hours. For instance, an investor who places an order for either buying or selling of any financial security after the regular trading hours falls under after-hours trading.
Oftentimes, investors miss the end time of regular trading hours and fail to place an order. In such a scenario, after-hours trading comes handy where the investors can still place an AMO while they expect the same convenient prices the next day when the market opens.
In addition, consider that an investor is currently holding 20 stocks. The investor is also expecting the share prices to surge the next morning and is willing to sell all of their shares immediately after the market opens. But the investor has some prior commitment that is mandatory to attend around 9 AM.
This means that the investor would not be able to place an order to sell his shares right when the market opens. In such a case, that investor can place an after-market order before the market open timing to sell all those 20 stocks. Whenever the stock market opens, the AMO gets pushed into the market automatically.
In a way, after-hours trading is also an advantage for investors who stay abroad. Given the time constraints, they can place an AMO during their daytime instead of waiting for regular trading hours to open.
Timings of after-hours trading
The actual market timing of two major stock exchanges of India i.e., BSE and NSE are between 9.15 am to 3:30 pm. So, the after-hours trading takes place beyond this time frame.
If you want to trade-in equity, the after-hours trading takes place from 3:45 pm to 8:59 am for BSE, whereas for NSE it is from 3:45 pm to 8:57 am. Moreover, the traders must be cautious while placing an after-market order close to the market opening or closure timings.
How to place an AMO?
Most importantly, any orders placed during the after-hours trading are known as After-Market Orders (AMOs). Placing an after-market order is similar to placing a regular order for any financial commodities.
The investor should first have in possession all the required accounts, i.e., demat account, trading account, etc. Then the investor can place an order for any equity derivative they would like to and just click on the option of AMO. Once the order is placed, the order gets pushed into the stock market right after the market opens the next day.
After-hours trading is definitely associated with a certain number of risks and so is the investment in the stock market in general. However, cautious investment during after-hours can aid investors in gaining huge returns.