Can I trade when markets are closed or shut down?

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Short Answer

In short, individuals are allowed to trade after the markets are closed or shut down. There are perks of trading after hours as well and it is also associated with certain risks. It depends on an individual what he prefers. Therefore, it is essential to be aware about it in detail.

Detailed Answer

Trading when markets are closed or shut down is called as After-hours trading. In India, both the markets i.e., National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) is active from 9am to 3:45pm. Any trades done after these active hours is known as After-hours trading.

In India, trading is allowed during after-hours or after the markets are closed or shut down. Via an investment tool known as after-market hours, the Securities and Exchanges Board of India (SEBI) allows traders to trade beyond the normal trading hours. This tool is suitable for users who, for whatever reason, will not have chance to observe the stock during market hours. In the after hours, the traders are allowed to place an order to sell, buy, receive, or deliver commodities or securities without any problem.

There are a lot of advantages or conveniences of after-hours trading:

  • It is very convenient for the Indian citizens who lived abroad to make trades as per their requirement and timings.
  • The companies have the time to understand the events going on in the company like the price swings, updating the information and monitoring the positions in the market.
  • Gives opportunity to the individuals to trade well and plan their investments as per their requirements.
  • It gives extra time to the investors to analyze their stocks extensively.
  • It is necessary to be careful as if traded carefully, you are less likely to incur losses as you have ample time.

Hence, we can know by it that it is a win-win for both the companies and the traders.

There are certain risks associated with after- hours trading but trading itself is a bit risky. Therefore, some of the risks associated are:

  1. Liquidity will be less: It is because not every share can be traded after-hours and there will quite a lot of difference between the ask and the bid price.
  1. Prices will be uncertain: During general trading, the prices are quite intact and is protected with security but in case of after-hours trading, there will not be perfect security and also the best values wont be displayed.
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