Toiling Round the Clock

Labor. Work. Effort.

Sometimes, you can try too hard. “We don’t just offer you fresh squeezed orange juice in the morning,” crows the hotel. “We squeeze it fresh for you the night before!”

It’s all well and good to labor mightily at investing, but unless you have a great deal of money to manage — and perhaps even then — I don’t think it makes sense. So it’s never particularly bothered me that I have to wait until the market opens to buy or sell a stock. It’s never really killed me that the market’s closed on Labor Day.

But wait!

“What exactly is after hours trading?” queries SuperJeff. “It sounds like the market doesn’t always lock the doors when closing time arrives.”

The answer is that I’ve never paid much attention to this, other than hearing, like you, that such-and-such stock “fell three points in after-hours trading.” After-hours trading isn’t available to us little guys — and just as well that it’s not. Are we really going to know some big news about a stock or the economy before anyone else? No. And once it is known, the price you get or pay in after-hours trading instantly reflects smart people’s assessment of that news.

But SuperJeff’s question made me realize how little I knew about this, so I forwarded it to a pro — he’s had spectacular success on Wall Street — to get the straight scoop.

He didn’t know, either. “I’m a good investor, lousy trader,” he wrote back, “so I asked my trader.” She came up with the following:

  1. If you’re an institutional investor hooked into it, you can trade on Instinet — an electronic trading system where institutions can make bids, show offers and execute trades over the computer. This trading lasts 24 hrs, technically with a shutdown between 7 and 7:30 p.m. There is also a blind crossing session around 6:30 or 7 p.m. where buys and sells are matched up and trade at NYSE or ASE last sale price (OTC stocks trade at midpoint of the market).
  1. There is also a matching session for the Arizona Stock Exchange (which I think is a computer in New Jersey, although they may have moved it) at 5 and 5:30 p.m., same pricing rules as above — can enter orders after 4 p.m. and orders can be entered on an open book (people can see your bid or offer) or on the closed book.
  1. Third-market trading (through Jeffries & Co., etc.) can take place 24 hrs a day, but you can no longer trade when there is a NASDAQ or NYSE halt on a stock due to news pending. (As you can imagine, it used to be like the Wild West over at Jeffries before news announcements.)
  1. The NYSE has a crossing session at 5 p.m. where stock is crossed at the NYSE closing price. Enter orders between 4:15 p.m. and 5 p.m.
  1. There is also some other weird crossing thing at the NYSE at 5:15 p.m. which involves baskets of at least 15 stocks.
  1. There are ways to trade overseas, too — in London, etc.

If you feel left out of the action, you may be trying too hard. Take the weekend off. And when you get back: finally, the cheesecake.

Tuesday: Yes! Fat-Free, Sugar-Free Cheesecake