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What to Know About Pre-Market and After-Hours Trading
Written by The Inspired Investor Team | Published on April 6, 2023
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Just as the names suggest, pre-market and after-hours trading takes place before the regular market session opens and after it closes. On North American exchanges, markets open at 9:30 a.m. and close at 4 p.m. Eastern time, Monday through Friday, with the exception of holidays.
Some investors choose to trade outside of those standard trading hours as a way to react quickly to major announcements that may affect securities they hold. However, trading outside of the regular market "day" session does come with greater risk that traders should be aware of. Read on to find more about those risks and some specifics when trading in pre-market and after-hours sessions at RBC Direct Investing.
Risks of pre-market and after-hours trading
Trading outside regular hours can be quite different from trading during the regular "day" session, so it's important to be mindful of the associated risks that can crop up. Here are some specific risks to be aware of:
Lower liquidity. Liquidity tends to be highest during the regular session, when most investors are placing orders. More investor trading makes it easier to match buyers with sellers, increasing the likelihood that your order is filled (and at a competitive price). However, this liquidity can be considerably reduced in extended hours when fewer participants are in market.
Higher volatility. Price swings (up or down) can be especially dramatic in pre-market and after-hours sessions, especially when larger trade volumes are involved. Sudden changes in price may surprise an investor expecting a certain price.
Changing prices. A lot can happen outside of trading hours, and the prices of securities traded in extended hours may not reflect the prices you last saw when the market closed or when it opens the next morning.
Unlinked markets. The price you see during extended hours may differ from the prices in other after-hours trading systems dealing in the same securities.
News announcements. Companies typically make big announcements outside regular market hours. If news hits as you're placing a pre-market or after-hours trade, the effect (positive or negative) on the price of a security can be exaggerated when combined with lower liquidity and higher volatility.
Wider spreads. The difference between the most a buyer is willing to pay for a security (bid) and the lowest price a seller is willing to accept for a security (ask) can be wider outside regular trading hours, when there is less market activity.
For RBC Direct Investing clients, there are a few key things to know about trading outside of regular hours.
When can I place a pre-market or after-hours trade?
RBC Direct Investing clients can trade stocks online during specific times outside of regular trading hours.
Good to know: pre-market trading is only available on U.S. markets; after-hours trading is available on both Canadian and U.S. markets.
| Pre-market (Eastern) | After-hours (Eastern) |
| 8 a.m. to 9:25 a.m. (U.S. only) |
4:01 p.m. to 5 p.m. (U.S.) 4:15 p.m. to 5 p.m. (Canada) |
All accounts are eligible for extended-hours trading, with the exception of practice accounts.
How do I place a pre-market or after-hours trade?
RBC Direct Investing clients can now place a trade online outside of regular hours (you no longer need to call us to place a trade). On the Place an Order page, simply use the toggle marked Pre-Market or After-Hours to participate. When the toggle is selected, choose your price for a limit order. A limit order lets you set a maximum purchase price for a buy order, or a minimum sale price for a sell order.
Good to know: All orders placed within a pre-market session expire just prior to market open, and do not carry forward into regular trading hours. All orders placed within an after-hours session expire at the end of the session, and do not carry forward into regular trading hours.
What are pre-market and after-hours quotes?
Pre-market and after-hours quotes are only available for U.S. markets, and quotes reflect trading happening during official U.S. pre-market and after-hours sessions. This timely information is especially useful to investors when an event that can impact a security's price (think: an earnings call, corporate restructuring or a global new event) occurs outside regular trading hours.
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RBC Direct Investing Inc. and Royal Bank of Canada are separate corporate entities which are affiliated. RBC Direct Investing Inc. is a wholly owned subsidiary of Royal Bank of Canada and is a Member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. Royal Bank of Canada and certain of its issuers are related to RBC Direct Investing Inc. RBC Direct Investing Inc. does not provide investment advice or recommendations regarding the purchase or sale of any securities. Investors are responsible for their own investment decisions. RBC Direct Investing is a business name used by RBC Direct Investing Inc. ® / ™ Trademark(s) of Royal Bank of Canada. RBC and Royal Bank are registered trademarks of Royal Bank of Canada. Used under licence.
© Royal Bank of Canada 2023.
Any information, opinions or views provided in this document, including hyperlinks to the RBC Direct Investing Inc. website or the websites of its affiliates or third parties, are for your general information only, and are not intended to provide legal, investment, financial, accounting, tax or other professional advice. While information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Direct Investing Inc. or its affiliates. You should consult with your advisor before taking any action based upon the information contained in this document.
Furthermore, the products, services and securities referred to in this publication are only available in Canada and other jurisdictions where they may be legally offered for sale. If you are not currently a resident of Canada, you should not access the information available on the RBC Direct Investing Inc. website.
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