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Understanding after-hours trading and strategies for success

In financial markets, an opportunity that can extend beyond the traditional boundaries of trading is after-hours trading. This innovative extension of trading activities allows investors to trade securities beyond the confines of regular market hours. As the conventional trading day gets into the shadow, after-hours trading illuminates another venue for investors. 

You will delve into the intricacies of after-hours trading, understand its mechanics, benefits, risks, and how investors shape investment strategies to trade in this unique landscape.

Understanding after-hours trading

There is a fixed stock market trading time in India to participate in trading and investing activities. The regular trading hours in India are 9:15 AM to 3:30 PM, Monday to Friday. 

After-hours trading refers to the activity of buying and selling financial assets after regular market hours. It is an opportunity to respond to market changes occurring after the closing bell in the market. 

  • Market Timings on National Stock Exchange (NSE)
Pre-opening session(9 AM – 9:15 AM)
Regular trading session(9:15 AM – 3:30 PM)
Closing session (3:40 PM – 4 PM)
  • Market Timings on Bombay Stock Exchange (BSE)
Pre-opening session(9 AM – 9:15 AM)
Regular trading session(9:15 AM – 3:30 PM)
Closing (3:30 PM – 3:40 PM)
Post close(3:40 PM – 4 PM)

The BSE closing time in India can be divided into two sessions – closing session and post close session.

Orders placed on exchanges after market closing time in India and before starting the next trading session are called AMO (After Market Orders). Collectively, after-hours trading and pre-opening trading are named as extended-hours trading. 

After market order timings explained

The designated timing to place after-market orders (AMOs) is from 4 PM to 8:55 AM on prominent stock exchanges in India – the BSE and the NSE. However, the timeframe for AMOs is subject to prevailing market conditions and fluctuations. 

Preparing for after-hours trading

After-hours trades can be placed like regular trades for equity and derivatives. Using your demat account and trading account, you can select AMOs on the broker’s trading platform. Ensure that you choose a SEBI-registered stock broker to open your demat and trading accounts. Once you place an after-market order, your order will be forwarded to the relevant stock exchanges when the next trading session begins.

Benefits of after-hours sessions

Benefits of trading during after-hours sessions include:

  • Extending trading window

After-hours trading offers greater flexibility in executing trades, especially for those committed professionally during the day.

  • Strategising investments well

After-market trading gives you adequate time to plan your trades based on thorough analysis and market trends. 

  • Reduced competition

There can be a more controlled trading environment with fewer participants in after-hours sessions. 

  • Potential for better prices

The after-hours market offers an opportunity for trading at better prices in certain situations than during regular market hours.

  • Reducing losses

AMOs can help skilled traders reduce losses with the anticipated impacts of news, announcements, or events that could result in a declining market. 

  • Global opportunities

After-hours trading allows investors or traders to benefit from international market movements occurring outside local trading hours.

Risks associated with after-hours trading

The ability to capitalise on overnight market changes comes with risks as well. Risks of after-hours trading include:

  • Reduced liquidity 

After-hours trading sessions typically experience reduced liquidity due to lower trading volumes than regular trading hours. 

  • Potential price gaps

The after-trading hours can result in price gaps. This discrepancy may lead to unexpected and unfavourable trading conditions for traders.

  • Heightened volatility

Individuals engaging in extended hours trading may have to manage increased volatility due to lower trading volume. 

  • Limited Information

Releases and events occurring after the regular closing hours of the market can impact asset prices during after-hours sessions. 

Risk management strategies

While the strategy guidelines will be the same for trading after hours and during regular market hours, traders should make extra accommodations for these risks when trading after hours. Here are a few strategies for after-hours trading:

  1. Gap trading strategy

Most gaps occur due to sudden news releases or an event. Traders need to identify stocks with significant news or events that may cause price gaps in their favour. 

  1. Volatility breakout strategy

The volatility breakout strategy involves identifying securities with significant volatility during after-hours sessions. Traders need to set up buy or sell after-hours trading orders based on breakouts from price ranges. 

The closing

While trading after hours, ensure that you calculate appropriate position sizes and employ trading strategies. This will help you manage volatility and liquidity concerns to trade as an informed trader during extended hours.


Is after-hours trading legal?

Yes, after-hours trading is legal. After-hours trading lets stocks be traded beyond the usual trading hours of the stock market. However, thanks to the reduced trading activity during these extended market hours, investors may expect their orders to be completed more slowly or not at all.

Can I trade at night in India?

NSE overnight trading hours are 3:45 p.m. to 8:57 a.m. You may place an AMO for currency trading between 3:45 p.m. and 8:59 a.m. Overnight trading hours for futures and options (F&O) are from 3:45 p.m. to 9:10 a.m.

Can I buy an intraday at night?

Intraday trades must be initiated and completed on the same day. As a result, the Indian markets’ intraday trading hours are every day from 9.15 a.m. to 3.30 p.m. In the pre-market session, intraday orders are not allowed. In the pre-open, only CNC orders are accepted. 

 What is an overnight risk?

Holding an overnight position can be risky, like a gap risk. This is the possibility of a major gap between the closing price at the end of one trading day and the initial price on the next one. The value of the held position may also be impacted by market volatility.

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