Pre-market trading involves buying or purchasing an asset before the market opens. The trading session usually starts at 9:30 am and finishes at 4:30 pm Nevertheless, these hours could change according to your jurisdiction.
Pre-market trading is an activity that became very popular in recent years. It could be very useful to trade news and for expert traders.
Disclaimer: the information shared by AltSignals and its writers should not be considered financial advice. This is for educational purposes only. We are not responsible for any investment decision you make after reading this post. Never invest more than what you are able to lose. Always contact your professional. financial advisor.
What are pre-market trading hours?
Pre-market trading hours is a trading period that takes place before the traditional market hours. That means that investors and traders purchase stock or other assets before the opening of the market.
The pre-market hours starts usually at 8:00 am and lasts until 9:30 am. During this period, the market would work as during normal hours but with a few differences. The trading hours would also depend on the broker. Indeed, it is now possible to trade starting at 4:00 am.
AltSignals shares the best trading signals with you.
How to do pre-market trading?
If you want to participate from the pre-market trading hours you have to simply buy or sell assets during pre-market hours. There is nothing else you can do. You can participate in the market knowing you would be among the first buyers and sellers of the day.
You should enter your broker account and start trading like during normal trading hours. In order to know whether you can do pre-market trading, you should check your broker and whether they have activated this option.
How does pre-market trading work?
Pre-market trading works by purchasing and selling stocks or other assets before traditional market hours. There is nothing different in the way the market functions. You can have access to most of the solutions offered by your broker.
Take into consideration that the volume is lower than during normal trading hours. This could be one of the negative things of pre-market trading hours. Nevertheless, you would be exchanging stocks with other investors from all over the world. You would not notice any difference with traditional market hours.
How do you buy stock in pre-market?
In order to buy stock in pre-market, you do not need to do anything special. You just enter your broker account and select the stocks you want to buy. If you want to sell you should follow the same process and sell the stock or asset you want to sell.
Nonetheless, not all exchanges offer pre-market trading. This is why you should understand whether the platform you use to trade has pre-market trading activated. Moreover, the pre-market hours could be different across exchanges and brokers.
Positive and Negative Aspects of Pre-Market Trading
There are some positive and negative aspects of pre-market trading. This happens because pre-market trading does not involve the same investors as during normal market hours. Let’s start with the fact that if you do pre-market trading you should know there is going to be less trading volume.
If you are a large trader, then this could have a negative impact on your position. You might have to pay a premium to purchase stocks during pre-market hours. If instead, you want to sell a stock or another asset, your large position might be sold at a discount rate.
The reason behind this problem is related to the fact that there are fewer buyers and sellers. You want to make sure you trade during normal trading hours to get your position filled at the best possible price.
A positive thing about pre-market trading is related to the fact that you can get exclusive access to the market and trade positive or negative news before others. However, you should take into consideration that due to the low volume, you might pay a premium or sell at a discount. This is why you want to make sure the news is bullish or bearish enough to pay for the price difference.
Later, during normal market hours, traders would confirm your trend if you were right with your analysis. In this way, you should easily make money trading in the pre-market hours. It is worth pointing out that it might not be necessary to trade in pre-market hours every single day.
