Pre-Market Stock Trading
The US stock market NYSE and NASDAQ are the biggest in the world in terms market capitalization. Trading volume naturally tops the highest in the world and keeping up with the pace is something that an investor must ensure in every given time. The US economy is the largest in the world and hence a successful stock investor needs to have a clear vision and a strong intuition of the overall economy before making a decision. Thankfully investors have the option to keep ahead of the regular time by starting early in the pre-market trading sessions of NYSE and NASDAQ which starts from 8:00 am to 9:30 am ET. Normal trading hours in the US stock market is from 9:30 am to 4:00 pm ET where millions rush in to trade in hoping to be the next Wolf of Wall Street. Pre-market stock trading provides the investors with an edge as they can scrutinize the market early before the normal trading hours starts and try to figure out the next move before the other investor wakes up to take a sip of his morning coffee. However pre-market trading has few rules like limited trading and volume due to limit in the order placed by the investors.
There are few advantages and disadvantages of Pre-Market stock trading.
- An investor can get the crucial data of an economy early and pace their investment decisions accordingly as they are usually released before the normal trading hours.
- A lot of companies also disclose their quarterly earnings before the market opens. So, a watchful eye during the pre-market trading can prove vital.
- Less crowded means more focus during trade and more attention towards any missed out opportunities during the previous trading sessions.
- During pre-market trading hours there are limit in orders which can hamper the flow of trading which is otherwise seen during the normal trading hours.
- Greater price fluctuations may occur due to limited trading activity.
- Wrong assumptions during the pre-market trading due to manipulative behavior of investors may prove fatal.
In a nut shell pre-market trading gives an investor the edge if they understand the activities and trading during that time. However over preparing can at times backfire and so one has to be very calculative and cautious before choosing a stock.