Post Views: 3,718

“After Market Orders” feature and its advantages and disadvantages are going to be discussed in this write-up. “After Market Orders” or AMO is an order feature offered by certain brokerage houses. As the name suggests, these orders can be placed by a trader after the regular market hours in any segment. The Indian Stock Markets work from Monday to Friday other than declared holidays. The normal working hours of the Indian Stock Market are as follows.

SEGMENT STARTING TIME CLOSING TIME
Equity segment 9:00 A.M 3:30 P.M
F&O segment 9:15 A.M 3:30 pm
Currency segment 9:00 A.M 5:00 pm
Commodity segment 10:00 A.M 11:45 pm

 However, many people cannot trade in the stock market as they could not make themselves available in these working hours due to various reasons. The most common reason is attending to their primary profession. AMO works well for those kinds of people who cannot devote their time to the stock market in its regular working hours. AMO is an advanced order that allows traders to place buy/sell orders after regular market hours. In other words, an AMO is similar to a normal order with the exception that it is placed after regular market hours. However different brokerage houses offer different times for AMOs. Also bear in mind that any AMO order during the regular market order will be rejected. All the AMO trades are pushed into the market at the opening of the next day. With this background in mind, let us look into the pros and cons of using the AMO feature.

Pros

  1. Since the price remains static after the regular trading hours, the trader gets to do ample research and then get into a trade.
  2.   The leverage available in regular hours is also available to AMO Orders.
  3.   The biggest advantage of AMO is it gives an opportunity to those traders who cannot spare time during regular trading hours. Thus office goers also can participate in the market using AMO orders.

Cons

  1. The foremost issue with AMO is the low trading volume in After Market Hours. This may lead you to get stuck up with a bad trade. Exiting a position may not be a cakewalk in AMO trades.
  2.   The AMO turf is ruled by big investors. With low trading volume, only a small number of shares would be available for a big demand which may lead to a big price swing. Such price swings can mow down small-time traders.
  3.   There is a chance that your AMO order goes unexecuted because the price you have set did not match during the next day. If you trade in the regular hours you may have the chance to modify the price and exploit the opportunities.
  4.   Special orders like Bracket Orders and Cover Orders are not available for After Market Orders.

In my opinion, the AMO feature has to be treated as an option when not able to be available during regular market hours. It never should be considered as a substitute for the regular hours trading.