Background

• AH trading originally was introduced for institutions to match large buy and sell orders. For example, if an institution was looking to sell 100,000 shares of XYZ at $25, and another institution was willing to purchase them at that price, the orders would be "matched," or crossed. Since the price could be agreed upon beforehand, there was no need for the transaction to take place specifically during the regular trading hours.
  
  

Who Can Trade AH?

• Agreeing on the price was easier to do for large institutions. With the emergence of the Electronic Communications Networks (ECN), which route every order electronically to the NYSE, small investors get a chance to participate in AH trading. If your broker's trading platform allows you to enter AH orders, you can participate, too.
  
  

How is AH Different from Regular Trading?

• AH trading is less liquid than regular trading because there are fewer participants. Most retail brokers only accept limit orders from individual investors, and there is no guarantee your order will be executed. It may take much longer to get your order executed AH.
  
  

Pros and Cons of AH Trading

• Many companies report earnings and material events after market close. Such announcements may cause the stock to go up or down the following morning at the open. Investors who want to get ahead of the crowd place their buy and sell (as the case may be) trades AH as soon as they digest the news.
  
  A stock's move AH may or may not be indicative of the opening prices the next morning when all market participants are present. Sometimes an AH trade may give you an advantage, other times you may pay too much or get too little for your stock. Some big players may use AH trading to manipulate a stock. For example, if a trader sees a jump or a drop in the stock price AH, he may decide to place an order at the open, which is exactly what the manipulator wants him to do for whatever reason.
  
  

Where to Get AH Quotes

• Yahoo Finance is the easiest way to check if a stock has moved AH--AH quotes come up automatically when you request a regular stock quote.