Question About Buying Stocks Online?
Friday, June 26th, 2009 at
10:59 pm
when you buy stocks online after the market closes are you buying at that days close or the next days open. because i noticed that a stock may close at lets say $17.36 but open the next day at $17.30, so after 4:00pm if i go online and buy at $17.36 but it opens at a different number what happens?
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Trading after hours is almost the same as investing on the “normal” hours. There’s a bid and an ask. If both prices match or get near, the transaction will take place. That’s just what happens on the PRE-markets. The pre-markets can be useful to detemine where a stock could open that day. Now, you have to take care of the following:
1. While after hours trading is a favorite tool to use when jumping on hot breaking news stories, one of the limitations is the relatively small total amount of buyers and sellers participating in an after-hours market at a given time. This lower trading volume can cause poor market liquidity, which can make a significant difference in your ability to enter and exit trades easily. What good is a sudden surge in your open trading profits when you can’t close the trade? Keep the danger of low liquidity in mind before placing an after-hours trade.
2. Since the after-hours market is thinly traded (relatively speaking), this can mean a significant disparity between bid and ask prices, causing more volatile price fluctuations. When this happens, it may be difficult to get your order filled without significant “slippage” taking place. “Slippage” simply means that your order was filled, but not at the price you had anticipated (usually worse).
3. Keep in mind that you will be competing against institutional (read: large) investors that have a ton of trading and research resources at their disposal. Trust me, there’s a reason why institutional investors have an affinity for After-Hours Trading…it’s basically low-hanging fruit for them.
4. One last thing. Depending on your broker, trading in after-hours and premarket is usually more expensive (higher comssions for you beloved broker… : )
Good Luck
If you buy at $17.36 and get confirmation from your broker that your order has been filled, then you will profit or lose depending on the opening price; you own the shares. If you have an open limit order at the close with your broker (online or otherwise), then you will likely get filled at your price if the next day’s if the stock trades down. On the other hand, if the stock opens up, you probably won’t get filled but the limit order will stand open.
I hope this helps.
-trader/ trade analyst
You cannot buy stock after the market closes. The opening price of a stock on one day DOES NOT have to be the closing price of the previous day. The two have nothing to do with each other. If you place an ORDER after hours, your order will be filled at the opening price of the next day…NOT the closing price.
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