what is extended trading 
extended trading is conducted by electronic networks either before or after the regular trading hours of the listing exchange such as the new york stock exchange nyse the u s stock exchanges are open from 9 30 a m to 4 00 p m est 1pre market stock trading in the united states commonly runs between 4 00 a m and 9 30 a m est and after hours trading occurs from 4 00 p m to 8 00 p m est understanding extended tradingelectronic communication networks ecns have democratized extended hours for trading outside of regular exchange hours an ecn is a computerized system that automatically matches buy and sell orders for securities in the market extended trading lets investors act quickly on news and events when the exchange is closed and these transactions can predict the open market direction extended trades commonly occur around the beginning or end of regular trading hours the majority of extended trading happens between 8 00 a m and 9 30 a m est similarly investors may trade until 8 00 p m but most extended trading occurs before 6 30 p m 2most brokers require traders to enter limit orders during extended trading sessions some brokers only permit extended trading on reg nms securities over the counter securities many types of funds some options and other markets may not be allowed during extended trading hours 1brokerage firms commonly determine the rules that apply during extended trading rules governing the various markets and venues that conduct extended trading vary and may differ significantly from policies that apply during regular trading hours 1extended trading risksthe u s securities and exchange commission sec highlights several risks associated with extended trading including example of extended trading in the stock marketthe following chart shows the extended trading session for abc company on a typical day with no company announcements the stock closes for trading on the exchange at 4 00 p m before 4 00 p m the one minute chart is active with price movement every minute of the trading day there is also volume associated with each one of those one minute price bars after 4 00 p m the volume drops off some price bars appear as dots because there was a transaction at only one price level during that one minute there are gaps between the dots because the price may change even though transactions haven t taken place fewer bids and offers may entice or scare an investor into transacting at the new bid or offer the last transaction of the evening occurs at 7 55 p m in this example the first transaction is posted at 7 28 a m the following morning the price trades higher than the prior close price but is quickly adjusted as the price falls more than 0 75 in minutes the price oscillates on the low volume before the official exchange opening occurs and volume escalates 