Medical student Syed Shah loves to trade tech stocks when most on Wall Street have called it a day. In what many professional investors view as an inhospitable trading landscape starved of liquidity and fraught with dramatic price swings, Shah and others see buying stocks outside of normal trading hours as a chance to get in early on those swings after popular companies such as Facebook and Chipotle Mexican Grill post quarterly reports. Observing that steep moves in the after-market hours often extend into the following day, the year-old New Yorker made a quick profit on Yelp after the review website reported a surprise second-quarter loss late on July But he's lost money, too.

It's not for everybody. Those risks have been on display in recent weeks as some high-flying stocks fell sharply after they reported earnings or reversed moves that were initially positive. On July 28, Twitter's stock surged 9 percent minutes after the company released second-quarter results that beat investors' expectations, only to reverse direction and slump to a 7 percent loss as CEO Jack Dorsey said on a conference call that the social networks' future growth was uncertain.

The wild price swings are at least in part a result of programmed trading, as algorithmically-driven investors jump into thinly traded markets in the moments following an earnings report.

Changes in the past decade to regulations and the technology used by E-Trade, TD Ameritrade and other online brokerages have also made it easy for any individual investor to trade stocks outside of normal hours. After-hours trades by institutional investors go through the Nasdaq and other exchanges as well as through dark pools, cloaked from the broader market.

What is after-hours trading? Am I able to trade at this time?

Online brokerages used by Shah and other non-professionals often route orders through electronic networks trying to match orders between customers, and they warn of light liquidity and heavy volatility. To protect their customers, they don't allow "market orders" to buy and sell stocks for open-ended prices. Investors sticking around after four instead of heading to happy hour may get a head start on the rest of Wall Street, but they also risk trading without a full picture of what's moving a particular stock.

After Hours trading with Etrade? | Yahoo Answers

He generally steers clear. Regular hours at the New York Stock Exchange, Nasdaq and other U. At online brokerage TD Ameritrade, extended-market stock trades are between 2.

Activity ebbs and flows every three months as corporations post their earnings scorecards before the regular market opens or after it shuts.

What is after-hours trading? Am I able to trade at this time?

But obviously that changed years ago," said Quirk. With most mutual funds and many other institutional investors staying away, liquidity is often sparse and gaps between bid and ask prices are wide, making it difficult to execute sizeable trades. I trade in the digestion period, not in the immediate-after period. Avoiding the after-hours market due to liquidity concerns also shuts an opportunity to react to surprise earnings reports before legions of other investors.

Many after-hours believers rely on strategies based on momentum. LinkedIn, Facebook and Twitter have histories of earnings-driven after-hours stock swings often widening in the next day's session, according to MT Newswires, which provides data for extended trading. But relying on momentum is far from foolproof. Even top-tier companies with relatively healthy after-hours liquidity, like Apple and Netflix, can see their stocks surge or slide within seconds after their reports.

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