What You Need to Know About Open Market Orders and After-Hours Trading

Learn about open market orders and after-hours trading - what they are, how they work, and their advantages and disadvantages.

What You Need to Know About Open Market Orders and After-Hours Trading

An open market order (MOO) is an order that is executed at the opening price of the day.


(MOO) orders can only be executed when the market opens. These orders must include the first printed price of the day and can only be placed during market hours. A market order placed when the markets are closed will be executed at the next market opening, which could be significantly higher or lower since its previous close.

Investors send open market orders when they want them to be executed at the opening price and be part of the morning auction. An investor can use this order if they want to capture the price of a stock, go up or down as soon as the trading day begins. Orders that meet the requirements for the opening auction cannot be canceled one minute before the opening session until the opening auction ends. In addition to normal trading hours, investors can also trade stocks during after-hours and pre-market operations.

After-hours trading allows you to buy or sell stocks after the market closes, while pre-market operations take place in the hours before the market opens. Depending on the foreign exchange market, there may be different rules for trading outside business hours than for normal business hours. Most brokerage firms require customers to accept the Electronic Communication Network (ECN) user agreement before performing operations after business hours. ECN electronically pairs buyers and sellers to execute limited orders.

Sometimes, after-hours orders are placed through a dealer at a better price than the best ECN deal. At the end of extended hours, all incomplete orders are canceled. Some brokerage accounts that offer after-hours trading include Merrill Edge, Fidelity, and Charles Schwab.After-hours trading can be especially useful if you need to make trades right away and minimize the risk. However, one of the main potential drawbacks is that buying and selling outside normal business hours could adversely affect your profitability.

For example, if you're trying to sell stocks for an extended hour, there might not be as many buyers interested in those stocks. In addition, price volatility tends to be higher during after-hours trading and your broker may impose trading limitations.If you decide that after-hours trading isn't for you, consider a stock market with different hours or simply wait to trade during normal business hours. A limited order will allow you to choose the price at which you are comfortable buying or selling, without time being an issue. It can be completed any time the price you selected is available.The stock markets close nine federal holidays a year, including New Year's Day, Martin Luther King Jr.

The fully electronic NYSE Arca is based on a system of competing market makers to provide a fast, efficient and consistent marketplace for all participants, including liquidity providers.Single-limit orders for comprehensive shares that are entered during an extended hours session, either before or after trading hours, are placed during the rest of the extended hours sessions on that day. A stop sell order is entered at a sell price lower than the current market price; if the stock falls to (or trades below) the stop price, the sell stop order is activated and becomes a market order that is executed at the current market price.Do you have any questions? Ask our investment expert.

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