After-hours trading allows investors to react quickly to breaking news that occurs outside regular market hours, such as earnings reports, mergers, or economic announcements. Since most corporate updates are released before the market opens or after it closes, after-hours trading gives traders an early opportunity to position themselves before the next day’s open. For example, if a company reports strong quarterly results after the bell, traders can buy shares immediately to take advantage of a potential price jump.

This flexibility can be especially valuable for active traders who want to capitalise on fast-moving information. It enables them to adjust positions, hedge risks, or lock in profits based on new developments. In global markets, where geopolitical events or policy changes can happen at any time, after-hours access helps traders stay responsive and maintain control over their portfolios.

However, reacting to news in these sessions also requires caution. Lower trading volume often leads to wider spreads and greater volatility, which can amplify both gains and losses. Prices may move sharply on limited orders, and early reactions are not always accurate indicators of how the broader market will respond the next day.

Overall, after-hours trading offers a useful window for traders to act swiftly on breaking news, but success depends on skill, timing, and understanding the risks that come with thinly traded markets.