Pre Market Stock Trading, Not For Everyone

Pre market stock trading takes place in the hours between 4:00am and 9:30am on various networks. This occurs before the stock market opens for the day. Investors can also trade after the market closes if they choose.

The network that you will be able to trade on is the one that your broker has chosen to use. Each network has different rules. So, if you are planning on practicing pre stock market trading, you should shop around for a broker that works with a network that fits your needs.

This is good to know for any investor, whether you choose to use this strategy or not.

Become Familiar With Limit Orders

You are usually required to use limit orders for all your trades when you participate in pre market stock trading.

A limit order is a price you set at which you want to buy a certain stock. If you cannot be matched with someone who will sell for what you are asking, the order is not executed.

This occurs much more often in pre pre stock trading than with trading during regular stock market hours. This is due to the fact that many people don't know about or are scared off by trading on these networks.

You Will Be Dealing With Professionals

Pre market stock stock trading is usually only frequented by professionals and high net worth investors. Usually these people have more information and experience than you and me. So, know this before you get too far into pre stock market trading.

Professionals Can Influence The Price Unfairly

Just as with the stock market, the price of a stock is only what the investors think it is worth.

But, with regular day trading hours, you have investors from all walks of life. From the middle-class American just getting started. To multi-billion dollar companies who are playing with a lot more money.

However, with pre market stock trading, you see mostly professionals and high net worth investors. These more experienced investors see things differently than the average investor.

So, say a press release was issued for XYZ company shortly after the market closes (which is often the case with quarterly reports). The professionals may take this news as good news and drive the price up. While the average investor sees it as bad news.

So, in this situation, when the market opens, the opening price may very well be different from the closing price from the pre stock market trading.

So, you can make lots of money with this strategy. However, there is more risk. If you wish to profit, you must truly must understand the difference between pre market stock trading and day trading.