Can You Sell Shares After Hours? What to Know

Understanding Extended Trading Sessions

Selling shares outside of standard market hours, often referred to as after-hours trading, is possible. This extended period allows market participants to react to new information or adjust their portfolios beyond the typical trading day.

Extended trading sessions encompass periods both before the market opens and after it closes. Pre-market trading typically occurs from around 4:00 AM to 9:30 AM Eastern Time. Following the regular trading day, after-hours sessions generally run from 4:00 PM to 8:00 PM Eastern Time. These specific timeframes apply to major U.S. stock exchanges like the New York Stock Exchange (NYSE) and Nasdaq.

These extended periods operate distinctly from the regular 9:30 AM to 4:00 PM Eastern Time trading hours. Electronic communication networks (ECNs) facilitate these transactions instead of traditional exchange floors. ECNs are automated systems that electronically match buy and sell orders. The primary purpose of extended hours is to provide investors an opportunity to respond quickly to news events, such as earnings reports or economic data, often released outside conventional market hours.

Key Characteristics of After-Hours Trading

After-hours trading presents a different environment compared to the regular trading day, primarily due to lower liquidity, meaning fewer active buyers and sellers. This reduced participation can lead to wider bid-ask spreads, where the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept becomes larger. Consequently, executing large orders might be more challenging and could significantly impact the stock’s price during these periods.

The diminished liquidity also contributes to increased volatility and larger price swings. With fewer participants, a relatively small number of trades or a single significant order can cause a stock’s price to move substantially in either direction. News events released after market close can trigger rapid price adjustments as investors react. Prices can fluctuate more wildly on lower trading volumes than during standard hours.

Another characteristic of extended sessions is the limitation on order types. Typically, only limit orders are accepted during after-hours trading; market orders are generally disallowed. A limit order specifies the maximum price an investor is willing to pay when buying or the minimum price they are willing to accept when selling. This control is important because it protects investors from unexpectedly large price movements that can occur in a less liquid and more volatile environment.

Executing Trades in Extended Sessions

Most retail brokerage accounts offer the capability to trade during extended hours, though investors may need to activate this feature within their account settings. This often involves acknowledging specific risks associated with after-hours trading, such as those related to liquidity and volatility. Before attempting to place an order, it is advisable to review the brokerage’s specific rules and disclosures regarding extended sessions, as policies can vary between platforms.

To place a trade during extended hours, investors typically follow a process similar to placing a regular market order, with a few distinctions. After selecting the desired stock and quantity of shares, the next step involves choosing a “limit order” type. The investor then specifies the exact limit price at which they are willing to buy or sell the shares. This price acts as a ceiling for buys and a floor for sells, ensuring the trade executes only at or better than the specified price.

When setting up the order, investors must select an option that designates the order for extended hours trading. This option might be labeled as “extended hours,” “good-for-day-plus-extended-hours,” or something similar depending on the brokerage platform. This tells the system to keep the order active during the pre-market and/or after-hours sessions. If a limit order is not filled by the end of the extended session, it will typically be canceled automatically. Investors should monitor their orders and be prepared to re-enter them if necessary for subsequent extended sessions or the next regular trading day.