Stock Trading Pre Market

Most of us are aware about the functioning of the Stock Market. The Stock Markets throughout the world function in the daytime and the timings everywhere are more or less from 9.30 am to 4.00 pm., with the timings varying an hour or so this side or that, from country to country. The Stock Exchange attracts thousands of traders and investors every day and there is a surge into the exchange as soon the opening bell goes off. But, some investors find these stock exchanges too crowded for their liking and prefer the less crowded stock trading pre market and after-hours stock trading sessions.

That is true; you can now trade before the market opens in the morning and after the market has closed in the evening. According to financial experts many companies report earnings after the market closes or before the market opens. As the value of a stock is constantly changing, people would like to access the market when the value of the stock is rising. Pre market stock trading commences about two to three hours before the market opens; the timings varying with the country. Most of the investors would like to be one up on other investors or competitors and would like to react quickly to some breaking news. With the introduction of the internet and Electronic Communication Network (ECN), investors and traders can easily place pre-market orders.

Pre market stock trading is not as simple as it looks and you will have to learn all the tricks before you can master the art of trading in the pre-market. A trader or an investor has to use a limit order to be certain of the price they are looking for. The volume of stock available for trade is very light as the bulk of the trading is done in the day.

Develop a trading plan that is convenient and comfortable to you and see that you stick to the plan. Develop a trading routine, starting your day with pre-market and ending the day with after-market trades. Indulging in the pre and after markets ensures that you are in total control of your portfolios.

Stock trading pre market does involve considerable risks and if you are not familiar with the tricks of the trade there are chances of your losing a lot of money.

·         Wide Margins: Due to a lower volume of trading, there may be a large disparity between the bid price and the asking price.

·         Unpredictability: The pre market has very few visitors as compared to the day market and the trading is relatively thin.

·         Lesser Liquidity: There are more buyers and sellers during the regular market hours than during the pre market hours. As the volume of trading is far lesser than in the day time, it may be difficult to convert shares into cash.

·         Small Investors: When individual investors trade in the pre market, they would be competing with large institutional investors who have more resources at their disposal than the average investor.

·         Computer Delays: There may be computer delays or failures resulting in your orders not being executed.