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BizReport : Trends & Ideas archives : August 08, 2019

Premarket Stock Trading: Getting Ahead of the Curve

If you're new to the world of investing in stocks and assets, then you've probably been under the impression that the market only opens between the hours of 9:30 am and 4 pm each day. However, the truth is that a lot of important moves and transitions take place before and after those hours.

by BizReport

The activity that takes place before the opening bell is called premarket stock trading, and the things that happen after the closing bell is known as after hours trading. Premarket trading and its counterpart aren't for the faint of heart. These options are often volatile and risky, because there's very little volume to trade. However, if you can learn how to properly understand the premarket and use it to your advantage, then there may be times where you can make some extra money as a result.

What is Premarket Trading and When Does it Happen

If you're buying and selling stocks before the market opens at 9:30 am - often through a broker with an electronic service, you're investing in the premarket. Importantly, there's no specific time when this activity occurs, as it all depends on the kind of broker that you have to work with. Some sessions can open as early as 4am, in the early hours before the day starts in earnest. However, there are also brokers out there that will only open their premarket sessions around an hour or so before the official opening bell.

The NASDAQ session for pre-emptive trading begins at 4:15 am and it ends at 9:29 am - which means that you're brought right up to the moment when regular investing begins. Importantly, there's very little limit to who can trade in the early or later hours of the day. Thanks to the advent of the internet and cloud computing, there are plenty of brokers out there will allow their users to trade however and whenever they want. Although some will have limits on the kinds of orders that they can offer at certain times of day. Even the style of the trade and the way that your investments are executed will depend on the broker you work with.

How to Trade in the Premarket

There are two essential things that anyone needs to get started with out-of-hours trading. The first thing is a strategy that takes your risk levels and needs as an investor into account. All trading requires carefully strategy and planning, otherwise you risk making decisions based on emotion alone. If you're not sure about your strategy yet, you can always test it on a paper trading system to see how well it works for you, without putting your cash at risk.
Additionally, you're also going to need a broker that can support your premarket strategy. Some brokers will stick to regular commissions for premarket trades, whereas others will charge more. Make sure that you find out everything you need to know about the kind of service your broker can offer if you want to do something outside of regular stock market hours.


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