Pros and Cons of Offshore Investing After Market Hours

Offshore InvestingEven with offshore investing activity, there are still periods in which the market associated with a given country is closed. When this is the case, you can still make arrangements for orders that can be processed as soon as the market opens the next business day. Before choosing to dive into the waters of after hours offshore investing, it pays to educate yourself a little about how the process works and what you should consider before setting up any type of transaction.

After Hours Investing

One of the first things you should understand is that after hours investing is based on the time zone where the market in question is located. In an offshore environment, your time zone is more or less irrelevant for purposes of creating orders. If the market you wish to invest in has already closed for the day and you don’t want to wait for that market to open in the morning to make a real time order, you will be engaging in after hours investing.

What Kind of Orders Can I Place?

The type of after hours orders you can place with a given market depends on the rules and regulations that govern the function of that market or exchange. Just about every market will allow investors to set up what is known as limit orders. Limit orders are authorizations to buy or sell a certain number of assets for a price identified by the investor or a price that is more advantageous for the investor. For example, you may want to sell a thousand shares of a certain stock and receive at least the specified price per share. If the market conditions allow, your broker may be able to obtain a higher price per share on your behalf, something that would provide you with more returns from the sale.

Limit orders can also include a time frame in which the transaction must occur. If a buyer or seller cannot be found who is willing to comply with your terms within that time, the order dies. This can actually protect your interests since it could offer a measure of protection in a rapidly changing market.

Some offshore markets may also allow for what is known as a market order. This type of order involves nothing more than indicating that you want to buy or sell a certain asset. A market order can be a good idea if you are fairly sure about where the asset will stand when the market opens again. At the same time, this approach can be disastrous if your projections of market movement are off and the asset opens at a price that is significantly different from what you expected.

Predicting Market Trends

Putting together an order after hours does involve assessing all known factors and getting some idea of what should happen in the marketplace the following day. This can be somewhat more problematic since you may or may not have a lot of information about the market to work with. Many banks in Belize do provide standings as of the market closing, but the data about the movement of different investments throughout the day may not be comprehensive. For this reason, it helps to consider movements over several days to determine if you can identify a specific trend. With that information in mind, it is possible to consider what has happened with the asset, think about upcoming events that could influence the movement, and then craft your order accordingly.

When you choose to set up an order after hours, make sure that everything is ready for the order to process. Unless you are buying on margin, it’s a good idea to transfer funds from your offshore banking accounts into your investment account. This will make it easier for the broker to move quickly on your behalf and make sure that any purchases you want to make are completed without delays.

About this author

Caye International Bank Limited (CIBL) was granted an Unrestricted "A" Class International Banking License on September 29th, 2003 by the Central Bank of Belize and is regulated by the Central Bank of Belize which set the standards for liquidity and capital adequacy.