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This is my first question and I'm very unexperienced in the field of stock trading so please be gentle.

Looking at a stock price chart (TSLA) I can see there is a so called "after market" in which trading is not possible but where the price does fluctuate. I'm assuming this is based on the fact that there's still the possibility for orders to be created in some form.

After market

It seems to me that the "closing of stock markets"-mechanism introduces the abilities for unhealthy competition practices.

Questions like these arise (my actual question is #3, however the answers on the previous questions feed into that):

  1. Why does the stock price fluctuate when the market is closed?
  2. Why do stock markets close every day? (other answer)
  3. Why are computers allowed to make trades?
Ropstah
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Why are computers allowed to make trades in a stock market regime that's regulated to be operated by humans?

Where does it say that people can't use computers to trade?

Looking at a stock price chart (TSLA) I can see there is a so called "after market" in which trading is not possible but where the price does fluctuate.

"Stock price fluctuate when the market is closed" because trading occurs in the pre and post market. Some brokers require that you have approval to trade in those sessions. Some brokers do not offer after hours trading.

Why do stock markets close every day?

Because them's the rules made by the people who make the rules.

Bob Baerker
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  • Where does it say that people can't use computers to trade? - @Bob Baerker: This is the opposite of what I'm stating which makes the rest of your answer hard to read... I would expect it to state somewhere that people are indeed not allowed to use computers to trade...

     – Ropstah Jul 09 '20 at 12:55
  • @Ropstah - Hey, I'm not the one who asked: Why are computers allowed to make trades? The rest of my answer addresses your other questions so if I deleted the portion of my answer relating to your computer question, it wouldn't make the rest of my answer less ** hard to read**. – Bob Baerker Jul 09 '20 at 13:07
  • I understand, it's just that the first two questions provide the context for the third question which in itself might sound random. However I don't understand how my question: "why are computers allowed to make trades" implies that it should state somewhere that people aren't allowed to use computers to trade. That's exactly my point: it -should- say that... – Ropstah Jul 12 '20 at 21:45
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Computers don't trade, because they don't own money. They are being programmed to execute trades for a person or company.

Regarding 'after hours trading': There is no difference in who trades 'after hours' versus 'within hours' - you too can sign up with a broker to trade 'after hours'. Maybe not your broker, because he doesn't offer it, so try another one.

Stock Exchanges are companies, and they can close if they want, so they have 'hours'. Same as your supermarket.
In other words, maybe your supermarket closes at 8 pm, but Walmart is open till midnight, so stuff still gets sold.

Aganju
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  • Fair statement about ownership. My phrasing could've been better, but I meant: "people using computers to trade" – Ropstah Jul 09 '20 at 12:56

  • Stock Exchanges are companies - I guess I overlooked this entire fact. This validates everything. Wouldn't there be some regulatory device from governments or legislative bodies controlling their rules?

     – Ropstah Jul 09 '20 at 13:01