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I am new to stock marketing. I have a question about all the price change after market closes. Let's say a share closes at 2.50 and after market is 2.80 and next day open is 2.80 or so. How can I make a purchase at 2.50 or around at same day or next day morning?

Does this have anything to do with FIFO or LIFO?

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  • Why is FIFO in the query title ? If you want to purchase at the low price, wait for the price to drop if it is currently high. – DumbCoder May 4 '16 at 13:06
  • @DumbCoder I am specifically asking about after market price jump. How can I purchase the stock after market closes? If I place an order after market closes will it execute in the order everyone placed an order? – user206168 May 4 '16 at 13:11
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    User, one issue you may be confusing. In some cases, the last trade at night may be say 7.20. Then, as it happens, the first trade in the morning may happen to be at 7.90. There is no "in-between". I get the sense you think it "must have" traded through 721, 722, 723...789, 790. This is simply wrong. There was a trade at 720 and then a trade at 790. It "jumped". There is no in-between, and you "missed-out" on nothing whatsoever. – Fattie May 4 '16 at 15:19
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    The oft-quoted values for a stock's "price" are historical. If you want to know what price you could buy a stock for, you need to look at the currently quoted asking prices, not the prices of past trades. See Can someone explain a stock's “bid” vs. “ask” price relative to “current” price? – Chris W. Rea May 4 '16 at 20:08
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If the price used to be 2.50 but by the time you get in an order it's 2.80, you're going to have to pay 2.80. You can't say, "I want to buy it at the price from an hour ago". If you could, everybody would wait for the price to go up, then buy at the old price and have an instant guaranteed profit. Well, except that when you tried to sell, I suppose the buyer could say, "I want to pay the lower price from last July". So no, you always buy or sell at the current price.

If you submit an order after the markets close, your broker should buy the stock for you as soon as possible the next morning. There's no strict queue. There are thousands of brokers out there, they don't take turns. So if your broker has 1000 orders and you are number 1000 on his list, while some other broker has 2 orders and number 1 is someone else wanting to buy the same stock, then even if you got your order in first, the other guy will probably get the first buy.

LIFO and FIFO refer to any sort of list or queue, but don't really make sense here. When the market opens a broker has a list of orders he received overnight, which he might think of as a queue. He presumably works his way down the list. But whether he follows a strict and simple first-in-first-out, or does biggest orders first, or does buys for stocks he expects to go up today and sells for stocks he expects to go down today first, or what, I don't know. Does anybody on this forum know, are there rules that say brokers have to go through the overnight orders FIFO, or what is the common practice?

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  • I believe LIFO and FIFO in this context refers to the order in which closing orders are matched up with opening orders to calculate capital gain. If the client selects FIFO, the brokerage will use the price of the earliest opening order as the cost basis. – TainToTain May 4 '16 at 21:43
  • @TainToTain I'm not sure what you mean by "opening order" and "closing order" here. You seem to be using them to mean "buy" and "sell". If that's what you mean, then yes, LIFO and FIFO are used to describe the matching of sales to purchases for purpose of calculating capital gain. Under FIFO, the first stock sold is assumed to be the first stock bought, and then working forward. Under LIFO, the first sold is assumed to be the last bought, and working backwards. But that doesn't appear to have anything to do with the OP's question, other than being "about stocks". – Jay May 5 '16 at 1:37
  • Well, you can sell to open and buy to close (i.e. a short position). That's why I used "opening order" is instead of "buy", but yes, that was the LIFO and FIFO I was referring to. I don't understand why OP asked about it, but this is the only selectable LIFO and FIFO I'm aware of. I thought it might be helpful to him to know what it was, just in case he didn't understand. – TainToTain May 5 '16 at 22:08
  • @TainToTain RE "might be helpful": Fair enough. – Jay May 6 '16 at 13:41
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Buying stocks is like an auction. Put in the price you want to pay and see if someone is willing to sell at that price.

Thing to remember about after hours trading; There is a lot less supply so there's always a larger bid/ask price spread. That's the price brokers charge to handle the stocks they broker over and above the fee. That means you will always pay more after the market closes. Unless it is bad news, but I don't think you want to buy when that happens.

I think a lot of the after market trading is to manipulate the market. Traders drive up the price overnight with small purchases then sell their large holdings when the market opens.

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  • Trades don't "drive up (or down) the price" unless everyone else is convinced that they represent a trend. A few shares moving at an atypical price is usually statistically insignificant; it's more likely to be someone being stupid than someone being clever. – keshlam May 6 '16 at 23:35
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You can make a purchase at the after market price by sending an order that gets executed in after market.

Often times these are called Extended orders, or EXT. With an EXT limit order it will place the bid on the after market hours order book.

If you get filled, then you have the shares.

This is the answer.

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The price of the last trade... Is the price of the last trade. It indicates what one particular buyer and seller agreed upon. There is absolutely no requirement that one of them didn't offer too much or demand too little, so this is nearly meaningless as an indication of what anyone else will be willing to offer or demand.

An average of trades across a sufficiently large number of transactions might indicate a rough consensus about the value of a stock, but transactions will be clustered around that average and the average itself moves over time.

Either you offer to sell or buy at a particular price, wait for that price, and risk the transaction not taking place at all if nobody agrees, or you do a spot transaction and get the best price at that nanosecond (which may not be the best in the next nanosecond). Or you tell the broker what the limits are that you consider acceptable, trading these risks off against each other.

Pick the one which comes closest to your intent and ignore the fact that others may be getting a slightly different price. That's just the way the market works.

"If his price is lower, why didn't you buy it there?" "He's out of stock." "Well, come back when I'm out of stock and I'll be unable to sell it to you for an even better price!"

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