Trading glossary
Extended-hours trading
By the PatternX team · Published
Definition
Extended-hours trading is trading outside a market's regular session: before the open (premarket) and after the close (after-hours). In US stocks the regular session runs 09:30–16:00 New York time, and the extended sessions usually have thinner liquidity and wider spreads.
Also called: after-hours trading
How it works
US stock trading is commonly split into three sessions:
| Session | New York time |
|---|---|
| Premarket | 04:00–09:30 |
| Regular | 09:30–16:00 |
| After-hours | 16:00–20:00 |
Brokers decide which parts of these windows they offer and which order types they accept, and limit-only rules are common. On shortened trading days, sessions end early. The SEC's Investor.gov site has a short glossary entry on extended-hours trading.
Why it matters
Companies often release earnings and other news outside regular hours, so the first reaction happens when the fewest traders are active. The usual risks:
- Thinner liquidity and wider spreads.
- Larger price swings on small orders.
- Prices that don't carry into the next regular session.
- Stop orders that some brokers don't accept, or don't trigger, outside regular hours.
Example
For example, a hypothetical company reports results at 16:05. Its stock closed at $50.00 and trades at $46.00 by 16:30 on a few thousand shares. A trader holding it with a stop at $48.00, at a broker that only triggers stops in regular hours, is still in the position the next morning, when the stock might open at $45.00, or back at $49.00.
Common mistakes
- Assuming stops behave the way they do during the day.
- Sizing positions as if regular-session spreads applied.
- Treating the after-hours price as the next day's opening price.
How PatternX uses it
Momentum Lab uses the three sessions in the table, with early closes at 13:00 (17:00 for after-hours) on shortened days. A session policy decides whether a position may continue from one session into the next. By default, Momentum Lab goes flat two minutes before the close and holds nothing overnight. Exits are marketable limit orders; a market order is used only in the regular session, when data is stale. In live mode with a hard stop, a GTC stop-limit emergency order also rests at the broker, but in extended hours only where the broker accepts stops at that time: IBKR does, Alpaca doesn't. Volatility-pause detection runs in the regular session only. The premarket entry and the guide to extended-hours trading risks go further.