What Is After Market Order (AMO) & How Does It Work?

What Is After Market Order (AMO) & How Does It Work?

The stock market is the place where individuals invest their money in order to generate wealth. But unfortunately, there many individuals who are interested in the stock market do not find the time to invest during market hours. Fortunately, there is a way one can invest in the market even after trading hours. 

In this article, we will be discussing what is after market order (AMO) in the stock market.

What Is After Market Order?

After market order is a type of order that you can place after the market closing hours. This is an advanced order that you can place when the market is closed but it gets executed at regular market hours.

This order is suitable for individuals who do not find the time to be active in the market during normal trading hours. But on the downside, you cannot place a stop loss, bracket, or cover order while placing an AMO. Only market and limit orders are allowed in AMO.

Timings Of After Market Order

While the normal trading hours start at 9:15 am and end at 3:30 pm, any order that needs to be placed after that time needs to be placed under AMO. The time frames for placing AMOs under different market segments are as follows:

NSE Equity Market: 3:45 pm to 8:57 am

BSE Equity Market: 3:45 pm to 8:59 am

Equity Futures and Options (F&O): 3:45 pm to 9:10 am

Currency Market: 3:45 pm to 8:59 am

Commodity Market: Any time of the day

How Does AMO Work?

Now that we have understood what is after market order and the timings of after market order, let us now take a look at how after market order works with the help of an example.

Suppose you place a market order for Tata Motors on NSE at the market rate at 5 pm. The order placed goes to the broker and stays the same until 8:58 am of the next day.

Once the pre-market opens, the order will be sent to the exchange by your broking house. When the market starts trading at 9:15 am, the order will be placed at the market rate or opening price.

What Is After Market Order

Suppose you placed a limit order of ₹408 and if your order gets matched in the pre-market between 9:00 am to 9:07 am, your order will be executed during that period. If not, it would be executed after 9:15 am

When it comes to limit orders in AMOs, there will be an extent to which you can place a limit depending on the broker. Some brokers allow an upper and a lower limit of  5% to place the limit order. In simple words, if the stock closes at ₹500, the limit order you can place can range from ₹475 to ₹525.

What Is After Market Order

Benefits Of After Market Order?

The following are the benefit of placing an AMO order

  • Individuals who do not find the time to trade or invest during regular market hours are provided the opportunity to do so through AMO.
  • AMO allows you to modify or cancel your orders which can protect you in times of any negative news or incidents that may impact the market.
  • AMO is available for all segments of the stock market.
  • AMO allows you to also place orders on the weekend.

Also Read: What Is Time Cycle In Stock Market & Its Phases!

In Closing

In this article, we discussed what is After Market Order is, the timings of AMO, how AMO works, and the benefits of placing an AMO.

Though After Market Orders provide the opportunity to invest or trade after the market hours, it comes with their own risks. Individuals should be cautious will placing this order and make wise and informed decisions in order to reap its benefits.

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