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What is Pre-Market Stock Trading?
Pre-Market Trading is the period of stock trading activity that occurs before the regular market session. In the United States stock markets usually open at Eastern Time 9:30 AM EST and closes at 4:00 PM. The Pre-Market Trading session generally occurs between 9:30 AM EST and 9:30 AM EST on trading days.
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To put in plainly, Pre-Market Stock Trading is the trading of stocks before normal trading hours. Tons of companies release important stock news outside of regular trading hours, especially in the morning well before the market opens, about quarterly earnings, dividend payouts, business achievements or an approval for certain product or project issued by FDA, NDA, etc.. Some companies will retard the press releases that announce big joint ventures or partnerships, new products, or executive changes until early in the morning. Such market moving news can have an influential impact on stock prices. Stock market news on events, governmental announcements and Data might also significantly affect the stocks' open-price. If as a Day Trader, you were about to trade on an early morning news, you'll need to place an order in the Pre-Market Trading Session.
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| Extended-Hours
Stock Trading is a quite new development. Extended-Hours Stock Trading used
to be a 'privilege' for institutional investors, but as of today since 1991
the great majority of online
stock brokers have offered Extended-Hours Trading to retail investors.
You can simply trade stocks in the Pre-Market Stock Trading hours though
any trading
platform that allows you enter positions in Extended Trading Hours
but trading is a bit different than buying or selling stocks during normal
trading hours. Unlike during regular trading hours, when orders
are routed through a physical exchange like the NASDAQ
or New York Stock Exchange, extended-hours trades occur through
an electronic communications network that is a platform online
brokerages use to match investors'
buy and sell orders and execute trades. Though from client's respect trade
execution is identical, there are certain limitations imposed to
Extended-Hours Trading such as traders can only place limit orders. Most
of brokers' platform allows you to place market orders during Pre-Market
Trading Hours or after-hours that will fill at the prevailing rate after
the market opens. |
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Some investors don't want to exploit the benefits of Pre-Market Stock Trading but they keep track of price movements during after-hours to get an insight where the market and individual stocks are going when normal trading hours begin. Such investors believe changes in prices and trading volumes can help them identify major market trends and forecast coming movements. Others intend to utilize Pre-Market Trading Session to try to appraise market reactions to breaking news as worldwide political or economy events, foreign stock market news released in different time zones, performance of foreign stock exchanges and other factors can affect US Stock markets or individual US stocks.
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Notwithstanding the unarguable advantages of Pre-Market Stock Trading, the risks involved are,
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increased volatility
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broader buy-ask spread
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lower liquidity
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rapid, and often extensive stock price fluctuations
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orders may be partially executed or not executed at all
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requirement for long-term trading experience.
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No Grueling Analysis
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Massive Profit Rate
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Lucrative Career
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While Pre-Market Stock Trading may provide benefits for Day Traders, it is imperative to understand the risks as well. Risks associated with extended-hours trading, especially during Pre-Market Hours is far higher and often common tools for stock analysis like stock charts or stock screeners will not be of help to you. Prior to looking into Pre-Market Stock Trading, the development of your own Day Trading strategy which involves a well-elaborated risk management is of paramount importance.
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PREMARKET TRADING HOURS 
EXTENDED TRADING HOURS 