This is a series of small articles to help with some of the basics in Trading in general.

The emergence of various trading platforms and technologies have made some trading types more accessible than ever. One of the cornerstones is the use of communication  networks that have created 24 hour markets  and round the world markets. One big example would be Forex. This is dealt with in later  trading courses.
Let us start with After Hours Trading.

Traditionally the hours for the US stock market have been between 9:30 a.m. -4 p.m Monday through Friday excluding holidays.  High net worth individuals could trade outside those hours. Online trading  was opened up to these individuals from the 1990s. Later,trading was provided for people such as day traders or any person who wished to trade.
The Electronic Communications Networks, or ECN’s, enable investors to make trades after the stock market has closed. This uses an Internet connection.  After hours trading normally requires a broker with access to a regulated ECN. The brokers matches your buy order  with another investor who wants to sell. If there are no takers, your order will be posted and hopefully there will be a seller that is interested.

Here are the basic steps you will need to follow to start trading after hours:

1. Find a brokerage firm that has after hours trading and open an account with them.  It is vitally important to fully understand all the fees associated with any trades you may make. Brokerage firms will have a minimum amount required for opening an account.  All firms will also have specific rules for after hours trading. Ensure you understand all the requirements before you begin to trade.

2. Once you’ve opened your account, you will need to make sure it is funded according the the brokerage and regulatory body rules.

3.   Take some time to find which stocks you want to trade.  It’s important that you learn how to properly research stocks before you start risking your money.  There are a lot of places that can teach you the basics of stock market investing, this is a very valuable education and not something you want to skimp on. Check out some of the other articles on the Blog to source these courses.

4. Make sure you know exactly what you want to pay for the stock, or what you want to get for it if you are selling, before you place your orders.  Most after hours markets only allow limit orders ( which means that you have to specify the exact price you are willing to take).

5. Place your market trade.  Once you’ve set up your exact price you can place your order on the brokerage firms ECN.

6. You will receive an order acceptance by a member of the ECN who wants to buy or sell the same stock you are looking for. 

7. If your trade was successful you will receive a receipt informing you of that fact.

This is a very high level overview but should give you some indicators of the specifics needed to trade after hours.
Now we will look at active an passive trading types.

These are key investment decisions. Do you want to be micro managing your investments or do you want to let someone else do the work for you?

There are definite pros and cons for each investment type. So here are a few things for you to consider when you’re deciding between active vs passive investing.

Active investment is used by people who invest in the stock market.  They will monitor various aspects of the market and buy and sell stocks on a fairly regular basis.  The idea is to make more money more quickly and to be able to react to the markets natural volatility. 

Passive investing is more about a long term, buy and hold approach and is usually done by investing in IRAs, Mutual Funds, and Bonds. This is the approach many people will use when it comes to saving for retirement or for college. For the most part you can expect to make the same amount of return on your investments as the market makes. 

For example, if you want to calculate the amount of money you will earn on a given investment you can just look at the averages of what a certain market has made over the last few years.  You will likely get a similar return on your investment.

Many people who believe in active investing styles believe they can get better results than the markets get, which is the biggest reason they will follow this investing philosophy. However, they do incur more risks along the way also.

For the most part, an active investor will be a little more hands on and do-it-yourself and for this reason there is definitely a learning curve.  You can’t just jump in and start buying up stocks without having some insight as to the best method of picking stocks to invest in.  Remember, you’re not buying a ‘stock’ per se, you’re buying stock in a company.  The amount of money you’re likely to make on any given investment is directly tied to how well the company performs.  While you will never have any guarantees you can do a little research into the company and it’s management as well as past performance to get a better idea of their potential.

When you go with a more passive approach to investing you will, to a large degree, be handing your money over to someone who will manage your funds for you.   They should have the expertise to pick the best possible investments for you.  If you choose this method it’s still very important for you to carefully pick the person who will be investing your money. Remember, most of them get paid a commission when they make a trade and they will get paid whether or not they actually make any money for you.  You should still be involved if you choose this method.

There are many strategies to stock investing and while both active and passive have  pros  & cons , with careful training and advice you can make a success of either type. It is also possible to take portfolio approach and use active investment for high risk and passive for a longer term back up. Also consider other investments as well such as metals as a hedge if things get too volatile.