2023-09-09 02:36:39
The After Market, also known as post-market, is an additional period to carry out trades on the Stock Exchange following the end of regular trading. These extra hours were created with the aim of offering more flexibility and convenience to investors, especially those who cannot follow the market during business hours.
The origin of After Market
The After Market concept began on the New York Stock Exchange in 1991, with the aim of increasing competitiveness and trading volume among investors. The idea was to provide extra time for participants to adjust their positions and correct any errors made during the regular trading session.
In Brazil, this post-marketing period was adopted as a way to allow investors with other occupations or who are unable to invest during business hours the opportunity to carry out their operations. Thus, After Market has become an alternative for those looking for more flexibility in their investment activities.
After Market hours and rules
After Market hours may vary depending on the stock exchange. In Brazil, B3 (Brazilian Stock Exchange) establishes the following hours for this trading period:
- Start: 5:30 pm
- Term: 18h
It is important to highlight that After Market has some specific restrictions and rules. During this period, only cash market assets and commodities can be traded. Derivatives, such as options, are not available for trading on the After Market.
Furthermore, shares traded on the After Market must be part of some theoretical B3 index portfolio, such as Ibovespa. This restriction aims to ensure that traded assets are liquid and representative of the market.
Another important rule is that the fluctuation of assets traded on the After Market cannot exceed 2% in relation to the closing price of the regular trading session. This limitation aims to prevent sudden movements and excessive volatility during this trading period.
Who can operate in the After Market?
After Market is available to all investors who have an account with a stockbroker. Both small investors and large institutions can use this additional time to carry out their operations.
However, it is important to highlight that each investor must be aware of their own strategies and limitations. The After Market can be an opportunity to adjust positions, make final purchases or sales, but it is necessary to be careful and follow the established rules.
Advantages and disadvantages of After Market
Just like any type of operation in the financial market, After Market has its advantages and disadvantages.
Advantages of After Market:
- Flexible hours: After Market allows investors who cannot follow the market during business hours the opportunity to trade at a time that is more convenient for them.
- Adjusting positions: This additional trading period allows investors to adjust their positions, correcting any errors or taking advantage of market opportunities identified following regular trading.
- Reacting to news: After Market also allows investors to quickly react to breaking news or events that may impact the market before trading opens the next day.
Disadvantages of After Market:
- Asset restrictions: Not all assets are available for trading on the After Market. Only cash market assets and commodities can be traded during this period.
- Lower liquidity: The number of investors operating in the After Market is lower compared to regular trading, which may result in lower liquidity for certain assets. This can make it difficult to execute large operations.
Conclusion
The After Market is an additional trading period on the Stock Exchange that offers more flexibility to investors. It allows adjustments to be made, positions to be consolidated and erroneous moves to be corrected following the close of regular trading. However, it is important to remember that the After Market has its own rules and restrictions, and each investor must operate within these limits.
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