After-hours Trading in the Korean Stock Market

1️⃣ What is After-hours Trading?

After-hours trading allows investors to buy and sell stocks outside the regular trading hours of 9:00 AM to 3:30 PM. This gives investors the opportunity to place orders or complete transactions even when the main market is closed.

After-hours trading is divided into three main categories: Pre-market Trading, Post-market Trading, and Post-market Single Price Trading. Each type has its own specified time and transaction method.

2️⃣ How Does After-hours Trading Work?

① Pre-market Trading

• Time: 8:30 AM ~ 8:40 AM
• Transaction Method: Trades are executed at the previous day's closing price.
• Characteristics: Before the market opens, transactions are completed on a first-come, first-served basis based on the closing price of the previous day.

② Post-market Trading

• Time: 3:30 PM ~ 4:00 PM
• Transaction Method: Trades are executed at the current day's closing price.
• Characteristics:
  • From 3:30 PM to 3:40 PM: Only order placement is allowed.
  • From 3:40 PM to 4:00 PM: Transactions are executed.
• ③ Post-market Single Price Trading
  • Time: 4:00 PM ~ 6:00 PM
  • Transaction Method: Trades are executed at a single price within a ±10% range of the day's closing price every 10 minutes.
  • Characteristics:
    • Transactions occur every 10 minutes.
    • This can lead to high volatility.
     

3️⃣ Let's Look at an Example:

• If the order is placed between 3:30 PM and 4:00 PM, the trade will be executed at the day's closing price.
• If the closing price is ₩70,000, the investor's order will be fulfilled at ₩70,000.

• • Scenario A: An investor wants to buy Samsung Electronics shares during Post-market Trading.
• Scenario B: An investor wants to use Post-market Single Price Trading.
  • If the day's closing price is ₩70,000, the investor can place a limit order within the ₩63,000 (lower limit) to ₩77,000 (upper limit) range.
  • The trade will be executed every 10 minutes based on supply and demand during this session
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4️⃣ Why is After-hours Trading Important?

• Investors can continue to trade stocks even after the main market has closed, expanding their trading opportunities.

② Reflects News and Events

• Key announcements or earnings reports made after the market closes can be quickly reflected through after-hours trading.

③ Allows for Risk Management During High Volatility

• For stocks that experienced high volatility during the day, after-hours trading enables more cautious and strategic buying or selling.

• • ① Provides Trading Opportunities After Market Close

💡 Conclusion:

After-hours trading offers additional trading opportunities beyond regular market hours, making it a valuable tool in volatile market conditions. However, low trading volume can sometimes make order execution challenging, so careful consideration is required.

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