To a large extent the extended-hours market place is a news driven market. In many instances there are fewer active participants to react to and digest the news being released from public companies and other sources.
With fewer investors participating in this marketplace, securities have less "liquidity", which, among other things, can mean larger spreads between bid and ask prices. Investors who are unfamiliar with the workings of limit orders find themselves handicapped in the ECN marketplace. Additionally, depending on extended hours trader's brokerage firm and how they have implemented their extended-hours trading session, the market centers that extended hours trader's orders can interact with may not include all possible execution venues. As a result extended hours trader's order may not be executed at the most favorable price available amongst all the market participants. There is also exists the possibility that extended hours trader's order may not get executed at all.
Since large investing firms often play a bigger role in moving stock prices up and down in the thinly traded extended hours market, investors can find themselves whipsawed by even more severe price volatility in the extended-hours market than is the case during regular exchange hours.
According to