The stock market in the United States is open for 6 and a half hours each day, between the hours of 9:30 and 4:00 pm. Professional investors and traders refer to these hours as “regular trading times.” Every day, thousands of individuals and businesses alike visit their stock market applications during those times to buy and sell. Wall Street is perpetually crowded during regular trading hours – even in today’s digital age. The question is, what do you do if you’re not available to trade during typical opening hours? What if you want to get ahead of the market, or avoid the crowds by trading in a time when there will be fewer people to compete against? You could always consider premarket trading.
What is Premarket Trading?
In the stock market, there are various “sessions” for trading that any investor can explore. The most obvious way to begin trading is to visit the stock market during the regular opening times between 9:30 and 4:00 pm. However, that’s not always the right option for everyone. If you’re looking for a different approach, then you can consider after-hours stock trading, or premarket trading instead.
As the name suggests, the after-hours stock market is what happens when the regular stock market closes at 4 pm. After hours trading occurs between the hours of 4 pm and 8 pm in some environments, depending on the electronic communication network that you use. Some brokers only open between 4:30 and 6:30 pm ET.
On the other hand, the pre-market is available before the stock market opens for regular trading hours. While some brokerage applications will allow you to jump in ahead of the crowds at about 8 am when you’re interested in pre-market trading, there are other organizations that will allow pre-market traders to get to work as early as 4 am.
Why Do People Trade in the Pre-Market?
So, why would you bother waking up early so you can trade in the pre-market instead of just using the regular trading hours? One obvious answer may be that you spend your workday away from the stock markets and won’t have a chance to buy and sell securities during regular trading hours.
Another reason why you might decide to trade in the pre-market, or even the after-hours market, is that you want to get ahead of other companies. Countless individuals and commercial traders report making significant earnings before the market opens. The intrinsic value of stocks means that their prices are constantly changing, regardless of whether the market is open.
Investors enjoy trading in the pre-market session because it allows them to get ahead of the competition and react quickly to news announcements that might take place before or after the market is open. However, just like any other kind of trading, it’s worth noting that pre-market trading requires careful planning and strategy.
Pre-market trading won’t be the right solution for everyone, as there’s a lack of liquidity and increased volatility to think about when you’re outside of typical trading hours. However, if you use this strategy correctly, it could be a great way to improve your wealth-building efforts.