How and why do stock prices fluctuate even after the stock exchanges close trading for the day?

Answer 1

Extended Trading Hours Since 1975 Electronic communication networks (ECNs) have allowed institutions to participate in after-market trades; individuals were allowed access to this platform in 1999. Typically, extended-hour trades must be done with limit orders. Most Online Brokerage companies offer the ability to trade until 7pm or 8pm EST Some things to be aware of if you are interested in after hours trading. * Limitations on Trading. Some companies only allow investors to view quotes from the one trading system that particular company uses for after-hours trading. You may not be able to complete a trade with another investor on another trading system * Ability to Convert Stock to Cash. Due to reduced activity you may not be able to quickly sell stock after hours as you would during regular trading hours. Finding a buyer may not be easy. * Larger Quote Spreads. Less activity can also create larger spreads, meaning bigger differences between buy and sell orders. * Stock Price Volatility. Fluctuations can be greater after hours, particularly if companies issue press releases after the markets close, or news stories are circulated that can introduce positive or negative bias. * Uncertain Prices. The prices of some stocks traded during the after-hours session may not reflect the prices of those stocks during regular hours, either at the end of the regular trading session or upon the opening of regular trading the next business day. * Limit Orders. Many electronic trading systems only accept limit orders. * Competing with Professional. You are also competitng with more professionals who have a lot more information at their disposal. * Computer Delays. You may experience problems executing orders when computer systems fail.