Stock prices often move after market hours, and these after-hours trades can be great opportunities to make money. Because there are fewer traders and lower volume, after-hours stock prices can move drastically. While big moves mean big profit potential, they can also come with a high degree of risk. The key is knowing how to assess risk and reward.
A stock may move dramatically following a news release, earnings report, or a strong earnings report. However, institutional investors may later realize that the company’s performance may not be as impressive as originally believed. Because of this, selling pressure may push the stock below the previous day’s close or the after-hours market.
Earnings are often released after the regular market closes, which allows traders to react to the announcement. Traders then hope to get a head start on other investors and take advantage of the sudden move in the share price. Earnings are a key metric used by investors to decide whether to buy or sell stock.
Following a news item, earnings report, or a strong earnings report, a stock may move sharply. Institutional investors, though, might come to discover that the company’s performance wasn’t quite as outstanding as they had first thought. As a result, selling pressure may lead the stock to fall below the close of the previous day or the after-hours market.
Earnings are frequently announced after the regular market has closed, allowing traders to respond. Then, traders want to go ahead of other investors and profit from the abrupt change in the share price. Earnings are a crucial factor that investors consider when choosing whether to purchase or sell shares.