The market closes at 4 ET every day, at which point we are unable to execute trades. But throughout the afternoon and evening, the price of stocks and ETFs varies and updates. Why is this the case, and why is the opening price on the next day equal to the closing price on the previous day?
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The primary distinction lies in the trading dynamics. During the day, there are market participants actively posting their bid/ask prices for most stocks and ETFs on exchanges.
In after-hours trading, while those participants aren’t as active, trading can still occur through limit orders, which can still be matched.
Now, let’s consider a scenario where stock ABC closes at $100. If, after hours, ABC announces a groundbreaking discovery a patented method for generating nearly limitless power from water with minimal pollution what would motivate anyone to sell for $100 the next day? It’s unlikely that anyone holding ABC would think, I will sell mine for $100.
Given this new information, holders of the stock would likely believe its value has increased significantly, perhaps to $150, $200, or even $500.
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Retail and market makers are the only traders mentioned in the post.
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Is it possible to enter a market order in pre- or post-market?
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As a retail trader, no. But someone has to ensure the ETFs are tracking major swings.
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If I’m not mistaken, market makers and authorized participants serve different roles.
What I am trying to say is that if market makers were active, you should be able to place a market order. The inability to do so suggests that market makers aren’t actually facilitating trades at that moment.
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They are distinct entities, but generally, most market makers are authorized participants for various ETFs.
The ability to place a market or any other order depends on the trading venue or exchange, not on who is submitting orders into the central limit order book (CLOB).
Many exchanges and venues don’t permit market orders. If your broker allows it, it typically executes as a limit order within the first few levels of the CLOB.
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Its purpose, like everything else, is to make you the bag holder.
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My shit-tier returns are the fault of everybody else except me.
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I am not sure I understand. Who is making that claim? Could you provide more details?
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After close, trading is still possible. We refer to it as extended hours. However, less liquidity.