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Stock/Crypto/Forex/Gold Trading
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Topic starter
After hours trading occurs, and so do events. The closing price is only the price that was in effect during the last transaction of the day when a buyer and seller agreed on a price, say $100 per share.
Now let’s suppose that during the night the XYZ company was found to have been selling fraudulent cures for cancer or aircraft that crash soon after taking to the air. As soon as that news is out, people cancel their buy orders at $100, and the buy orders at $80, $60, $40.
The only guy who didn’t cancel his orders had a buy order in at $3/share.
Next morning, you have a choice if you want to sell: Accept the $3 bid, or don’t sell. No other choices are possible. WHAT WILL YOU DO?
Enough people will accept the $3 that the price drops from $100 to $3. That’s the way the market works.
Posted : 10/12/2021 5:12 am
Topic starter
Stock prices constantly change based on the laws of supply and demand.
New information doesn't care if the market is closed or not, it just comes out arbitrarily.
When new information surfaces that creates an imbalance in supply and demand and traders make transactions on the market until a new balance is found, and the process repeats.
Many stocks even move when the market is closed, as traders revalue what a stock is worth to them and transact on that figure, which is why some days stocks open with a gap higher or lower, and it can be significant.
The purpose of the market is to facilitate transactions and liquidity between traders, not to value the price of a stock. Value is based on supply and demand, which is then measured by the price on the market.
Hope this helps.
Posted : 10/12/2021 5:13 am
Topic starter
Hi,
There is something called aftermarket trading for some stocks, although there is a lot less investors, that means that with a little volume the stocks move a lot more than during market hours. Also, there are some foreign stock exchanges, that have US stocks listed in their exchanges, and trading of those is possible even if the markets in the US are closed.
If you are interested in the markets, I recommend you to go to Peeptrade, a social network for investors, where you can see what other investors are doing with their own money.
Best
Juan
This is “after-hours” trading. This use to be used only by institutional investors. But now, many platforms allow you trade an hour or so before the market opens and after the market closes.
Robinhood’s gold plan allows you to trade 30 minutes before the market opens and 2 hours after the market closes.
Hope that answers your questions,
Caleb
Posted : 10/12/2021 5:15 am