A field guide to a market structure that no longer exists: ECNs racing each other for retail order flow in 1999 and 2000. The trading tips are real for that moment, but the moment is gone.
The one idea
The book exists to explain and exploit a very specific, very new thing: after-hours trading had just opened to retail investors when this was written, and the authors position themselves as guides to a fragmented, illiquid, half-built market where electronic communication networks (ECNs) like Island, Instinet, MarketXT, and REDIBook competed for order flow with no single consolidated price feed.
Their core pitch is that this fragmentation and thin liquidity, while dangerous, created exploitable gaps: price discrepancies between ECNs, wide bid-ask spreads a nimble trader could scalp, and a several-hour window after the 4:00 p.m. close where retail traders could finally react to earnings and news before the next morning's open, something only institutions could do before after-hours trading existed.
Layered on top is a second, more generic idea: trade only liquid, high-volume names, wait for confirmation before acting on news, size positions small ('be a nibbler'), and treat patience as a discipline rather than a virtue. That part of the book could apply to any market. The part that made the book worth buying in 2000, the ECN arbitrage and spread-scalping mechanics, is the part tied to a market structure that has since been regulated and consolidated out of existence.
What it actually teaches
The book does not build toward one sequential system. It hands over four distinct components of the ECN-era after-hours toolkit.
SCREEN FOR VOLUME AND LIQUIDITY FIRST
Before trading a stock after hours, check its volume against its regular-session average. The authors' example: a stock trading 200,000 shares in the premarket against a 1 million share average daily volume is running at 20 percent of normal by the open, which they call genuinely high premarket volume, not a warning sign. Below that, treat the stock as thin and prone to one large order moving the price.
LET NEWS SETTLE BEFORE YOU TRADE IT
Wait several minutes after an earnings release or news announcement before entering, because the retail trader cannot see analyst 'whisper numbers' (the informal, updated earnings estimates institutions circulate ahead of an official revision) and cannot predict the market's reaction from the headline alone. The book's own example: Intel beat estimates by 5 cents and still fell, because the post-earnings conference call moved the stock more than the number did.
PRICE YOUR LIMIT ORDER TO THE BOOK, NOT THE HEADLINE
Since after-hours markets accept limit orders only, set your price relative to the visible bid and ask in the ECN's order book. For a fast fill, bid an eighth or a quarter point above the current bid; to fish for a better price, bid at or below it and wait. Start with small size (their term: be a 'nibbler', for example 100 shares instead of 1,000) to test whether your price is competitive before committing a full position.
TRADE THE STRUCTURE ITSELF WHEN THE EDGE IS THERE
Chapter 9 lays out three structural plays specific to the fragmented ECN market: arbitrage the price gap between two ECNs quoting the same stock (their worked example: buying Apple at 95 15/16 on Island while MarketXT bid 96 3/16, a quarter-point profit worth about $150 on 700 shares after commission); scalp the bid-ask spread by buying on the bid and selling on the offer (their example needs roughly 1,000 shares on a quarter-point spread to clear about $200 after commissions, since 100 shares nets about even); and watch for a 'gap and trap,' where market makers bid a Nasdaq stock up in the premarket on thin volume, then drop their bids the instant the market opens, trapping premarket buyers.
What it looks like Monday morning
Almost none of this method survives contact with a modern broker. Fractions of a point (an eighth, a quarter) stopped being how stocks are quoted when the market decimalized in 2001, which guts the arithmetic behind both the arbitrage and spread-scalping examples. The ECN price discrepancies the arbitrage chapter depends on were closed by the consolidated tape and market-linkage rules the SEC finished rolling out over the following decade, and every broker now routes after-hours orders through the same NBBO. There is no equivalent trade left to place on Monday morning.
What does carry over is the discipline layer underneath the mechanics: check volume against average before trading a thin session, wait out the first few minutes of a news reaction instead of chasing the headline, and size in small first to test whether your price is actually competitive. Those are generic risk habits the book happens to illustrate with 2000-era numbers, not something unique to this text.
| ECN | Best bid | Best offer |
|---|---|---|
| Island | 95 3/8 (500 shares) | 95 15/16 (700 shares) |
| MarketXT | 96 3/16 (1,000 shares) | 96 9/16 (300 shares) |
Buying the 700-share Island offer at 95 15/16 and selling on MarketXT's 96 3/16 bid nets about a quarter-point per share, roughly $150 after commissions on the book's numbers; the trade requires simultaneous multi-ECN access and stopped being reproducible once decimal pricing narrowed spreads across ECNs.
Be patient with your winners and impatient with your losers.Michael Sincere and Deron Wagner, The After-Hours Trader
Where it fails
- The whole arbitrage chapter depends on fractional pricing that stopped existing in 2001. The book's worked arbitrage and spread-scalping examples are priced in eighths and quarters of a point (95 15/16, 96 3/16). Decimalization replaced fractional quoting across U.S. equities in 2001, and the spreads narrowed with it, so the exact dollar profits the authors walk through (roughly $150 on an arbitrage trade, $200 after commissions on a spread scalp) are not reproducible math on today's penny-wide markets.
- ECN price discrepancies, the source of the arbitrage edge, were closed by regulation. Chapter 9's ECN arbitrage play works only because Island, MarketXT, Instinet, and REDIBook quoted the same stock at different prices with no shared feed. The book itself notes this fragmentation was 'slowly narrowing' even as it was written. Consolidated quote systems and later market-linkage rules eliminated the gap the strategy relies on, so there is nothing left to arbitrage between ECNs today.
- It assumes paid infrastructure that is now free or obsolete, not an edge. The book treats a real-time scrolling news feed (Dow Jones, Bridge, or Reuters, priced as a paid add-on), a broker with access to multiple ECNs, and a Nasdaq Level II screen as advanced tools that separate serious traders from novices. All three are now standard, often free, features at any retail brokerage, so tips built around obtaining them are not actionable advice anymore, just history.
- Close to half the book is regulatory history, not method. Chapters 1 through 4 and Chapter 8 (over 110 of the book's roughly 280 content pages) walk through the SEC's rulemaking process, ECN business models, and Wall Street politics around extended-hours trading. It is a reasonable primer on how after-hours trading came to exist in 1999, but it is not strategy, and it pads a book whose actual method fits in one chapter.
- The evidence for 'have a selling strategy' is a single personal anecdote, not a rule. The authors' case for disciplined selling is their own story of buying Ericsson at $19, selling at $30 for a profit, and watching it later trade past $90. That illustrates regret, not a repeatable selling rule, and the book offers no other example or data to back the advice with.
Who it is for
Buy it if
You are researching the early history of electronic and after-hours trading, or you want a primary-source snapshot of how ECNs, spreads, and market-maker behavior worked before decimalization and Reg NMS. It reads well as market-structure history.
Skip it if
You are looking for an after-hours or extended-hours trading strategy you can actually run today. The book's specific edges (ECN arbitrage, fractional spread scalping, exploiting quote fragmentation) were closed by regulation and decimalization years ago, and the generic risk-management advice underneath them is available in any modern trading book without the outdated wrapper.
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