Pre Market Stock TradingPre market stock trading information. What is extended hours trading? Learning about the after hours stock market.
What is Pre Market Trading?It's a form of extended hours stock trading which takes place on days that the markets are open but prior to the opening bell of the New York Stock Exchange.The pre market stock trading session is from 8:00-9:30 a.m.
Pre Market Trading MechanicsExtended hours trades can be placed online if your online broker offers this feature.Because trading volumes are thinner and the extended hours market is more volatile, it is usually best for the small investor to trade during normal stock market trading hours. If you do decide to place pre market trades, use a limit order to protect you from the added downside risk. The only time I would place a pre market trade would be to lock in a profit if one of my positions made a big move to the upside that I didn't think would continue through the open. Or to avoid a bigger loss if it moved strongly to the downside and I thought prices would continue to deteriorate after the open.
Pre Market Stock Trading InformationMarket makers and ECNs are not required to participate in pre market trading so spreads are wide and liquidity is often lacking.A lot of panic buying and selling goes on in the pre market hours, usually because of news reports. For example: 0n April 7, 2010 Pure Bioscience, a specialty chemicals company, announced that the EPA had cleared its new disinfectant for use in food-handling applications. The red hot penny stock rose 63% in pre market trading. Everyone wants to get in on something like this. The problem is, because so many traders are desperately trying to put on a position at the same time, the share price will rise too quickly. You may end up chasing it up and buying in at too high a price. If you had been swing trading during normal stock market hours, you could have bought the shares at the 50 day moving average on the 1st or the 5th for about $1.61 and sold them on the 7th for more than $3.09--again, during normal stock market trading hours. A gain of 92% or more. The problem, of course, is that you would not have known what the EPA's decision would be before you entered the trade. If the new disinfectant had not been approved, you would have lost money.
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