What Is Pre Market Trading?


What Is Pre Market Trading? By www.ProfitableTradingTips.com The stock market news often reports that a
stock is up or down in pre market trading. So, what is pre market trading? It is trading
that takes place before the NYSE or NASDAQ open. What is pre market trading for the average
investor? It is a market with reduced liquidity and reduced volume in which the trader is
wise to always use limit orders to protect himself from unexpected market swings. What
is pre market trading compared to after market trading? They are the same thing. Pre market
simply refers to price action that occurs shortly before markets open instead of just
after they close. The point of pre market trading is that news breaks and things happen
when North American markets are closed. One who is trading Roche and Avastin, for example,
may pick up on news from the Swiss company’s headquarters. The announcement may come in
the morning in Switzerland. This will be during pre market hours in North America. Anyone
who wants to trade coming price swings in Roche will have better luck trading in the
pre market hours as Roche ADRs could open at a substantially different price from the
previous day closing on the NYSE. What is pre market trading to the trader who picks
up on the news and trades it successfully? It is profitable. Not all market makers and not all electronic
communications networks are active in pre market trading. As such volume is lower and
so is market liquidity. This is why experts suggest that a trader always use limit orders.
Pre market trading can be quite profitable and it can be disastrous if the trader is
out of touch with market movement or if a huge and unanticipated price jump occurs just
after the trader makes a trade. Because of the lower liquidity of the pre market or after
hours market trading techniques such as scalping and shaving may or may not work very well.
Likewise, technical analysis software works the best when volume and liquidity are high.
What is pre market trading for the technical trader? It could a pitfall, where otherwise
accurate trading signals fail to warn of pending price changes. What is pre market trading for the individual
attuned to its idiosyncrasies and ready to profit from breaking news? It can be quite
profitable. The world is a big place and billions of folks are working while North American
markets sleep. Changes in Forex, commodities, and non-North American stocks happen routinely
while Americans and Canadians are in bed. For the trader willing to adjust his hours,
trading the events of the world, in that thinly traded market, could just be the best way
to make profits. As in all trading, the trader will need to develop a trading strategy appropriate
to the pre market. A pre market trader will certainly need to learn how to trade stocks
online as brokers are not waiting to take calls in pre market hours. As in all trading,
focus is important. Not all opportunities in pre market trading are equal. Knowing where
to look for market opportunity in the pre market can be as important to profits as executing
skillful trades. For more insights and useful information about
trading stocks, options, futures or Forex, visit www.ProfitableTradingTips.com.

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