Many individuals want to invest in stocks online. However, a significant number of them do not get time to analyze and invest during trading hours.
So, what if you want to invest outside regular stock market hours?
Meet After Market Orders (AMOs), which allows you to place an order even if the markets are closed.
What is an After Market Order?
Orders that are placed after the market closes are known as After Market Orders. Referred to as AMOs, these orders allow you to place orders at your convenience.
Every AMO is added to the system and, as soon as the market opens, it is sent to the exchange for execution.
This advance order can be placed at any moment after the market closing, and it will be executed during regular market hours.
How Does an After Market Order Work?
Orders for AMOs can be placed either before or after the market opens. Depending on the brokerage or trading platform you choose, exact times may change.
In order to place an AMO order from a trading platform, you must now select a trustworthy stockbroker.
Now, place an order and this order will be executed during the regular market hours at the best price that is available.
Keep in mind that depending on the market conditions and available liquidity at the time of execution, the actual execution price of an AMO order may change from the price you specify or from the price that was last traded.
You can usually change or cancel your AMO order until the start of regular market hours. However, read the proper guidelines and after market order time set out by your broker.
Example of After Market Orders
For a better understanding, consider a scenario, where you want to purchase 100 shares of ABC Ltd. at 8 PM. Now, you will place an AMO order which is at the market price.
Your placed AMO order is sent to your broker, where it remains until the following trading day at 8:58 AM. The AMO order is sent to the stock exchange by the broker at 9:00 AM on the next day.
Your order is placed at the opening market pricing when the stock exchange opens for business at 9:15 AM. Let’s say you put a limit order for Rs. 1500.
Your AMO order will be processed between 9:00 AM and 9:07 AM if the price is matched in the pre-opening market. If it is not, the order is completed after 9:15 AM.
Functions & Purposes of After Market Orders
- There are many important news and events that affect the stock markets overnight. So, AMO allows you to take advantage of the market-moving information and trade outside the regular trading hours.
- The main purpose of AMO is to provide flexibility where you can trade at any time of day apart from regular market hours. There is no necessity to stay active during the regular hours to earn profits.
- AMOs are not only restricted to equity segments. You can use that even for other market segments like commodities, F&O, forex, etc.
AMOs Vs Other Order Types
There are many order types that you should know about to optimize your strategies.
Limit order: AMOs and limit orders function similarly since you may select the price at which you wish to execute a trade. But AMOs are made especially for after-market hours.
Market Order: You can place the market order during regular market hours, however with AMOs, orders can be placed afterwards as well.
Stop-loss order: The main use of stop-loss order is to protect yourself from heavy trading loss in your existing position. However, AMOs are mainly to provide you with the flexibility to trade beyond the regular hours.
When to Use After Market Orders?
You can use AMO orders when you want to do some stock market transactions beyond the usual trading hours. To keep ahead of market moves, you can act on signals before the market’s opening.
You can easily place orders on the weekends, which will reduce the inconvenience of trading during the hectic weekdays. You can also manage the overnight risk by establishing the entry and exit points in advance.
Conclusion
After Market orders are a great tool that offers you flexibility and convenience. You won’t miss a trading opportunity when you use AMOs because all of your orders will be pushed at market open, giving you the advantage of getting the initial opening price.
FAQs
Q. Which is better AMO or pre-market order?
Choosing between the AMO or pre-market order will depend on your trading strategy and the timings because both order types are designed to meet extended trading hours.
Q. Is AMO order profitable?
Yes, an AMO order is profitable if you use it correctly with the right trading strategy.
Q. Which is better AMO or GTT?
The purpose for both orders is different. AMOs are executed during after-market hours, whereas GTT orders are contingent orders that become active whenever a particular trigger condition is satisfied.
Q. What are the benefits of AMO order?
The main benefits of using AMO order is gives you the flexibility to trade anytime, manage your overnight risk and take extended trading opportunities.
Q. Can I place AMO on Sunday?
Yes, AMOs can be placed during weekends, and they’ll be executed on Monday ( if it’s a trading day). However, you need to check with your broker before placing an order.
