Ask Colin

Why do prices change after the stock market closes at 4pm?

The reason prices change after the formal closing of business at 4pm is that there is an "after-market" session in which anyone can participate in an auction that works exactly the same as th epre-open procedure in the morning.

These trades are just as legitimately the market as other investors. In fact, they might argue that they are the "real" market in some sense, because some of them are professional investors looking to manage larger parcels of stock. Certainly they are more likely to determine the prices at which stocks sell than the small investors. To that extent, technical analysis does not lose its validity by inclusion of these prices.