A few years ago investors like you and me, that is individual investors, could just buy and sell stock during regular stock market hours. In the US, the regular business hours for the stock market is from 9.30 a.m. to 4.00 p.m.
However, in the 1990s trading before and after the regular hours could be done but was restricted to two elite groups — institutional players and high net worth individuals. However, with the advent of online trading in the late 90s, individual investors also started demanding after hours trading.
At the same time electronic trading venues, known as Electronic Communications Networks (ECNs), came about and these venues made it possible for individual investors to trade after hours. This opened a entirely new avenue for many individual traders who could now trade but were not restricted by hours kept by the stock exchanges.
In order to use after hours trading, an individual has to be a customer of a brokerage firm that has either its own ECN or has access to other ECNs. Some popular ECNs in the US include Island, Market, Archipelago, Instinet and XT.
The ECNs do not operate during the same hours as market, and some do not follow the rules of the market. Most ECNs are affiliated to online brokerage firms and have their own rules. There are some ECNs which only accept limit orders; this means that the investor has to specify the price at which he wants to buy or sell. On the other hand, the risk associated with after hours trading make it worthwhile to use limit orders.