If you’ve been exploring the stock market for a while now, then you’ve probably encountered several interesting terms like “day trading,” penny stocks, and even after-hours trading. Here, we’re going to tell you what you need to know about after-hours trading sessions, and why people choose to buy and sell outside of the standard market hours.
After-hours trading and premarket stock trading are terms that refer to trading sessions that occur outside of the typical opening hours of the US stock market. The US equities market opens at 9:30 ET and closes at 4:00. However, if you have the right broker, you can continue to buy and sell securities both before the market opens and after it closes.
Who Can Trade in Premarket Sessions?
Depending on the broker you work with, you may be able to engage in pre-market trading from as early as 4 am EST, long before the opening bell. The “conventional” premarket happens at between 8:00 am and at 9:30 am. This is when there’s more volume available for trading, and discount brokers start to provide access to their clients.
Any trader who has access to an online brokerage account today should be able to invest in premarket trading. However, there are still some brokers out there that don’t offer this service. Make sure that you check your options carefully before you sign up with a company. Of course, just because you can trade in the premarket doesn’t always mean that it will be the right strategy for you.
Should You Trade in the Premarket?
As a rule of thumb, it’s usually a good idea for newbies to the stock market to stay away from premarket and after-hours trading. The environments outside of traditional trading hours are far more volatile, and a lot less liquid than they would be if you stuck to trading between the opening and closing bells. If you make a mistake after hours, then the damage can be significant.
Premarket trading also comes with a lot of risks. There are fewer buyers and sellers active on the market at this time. This means that if you suddenly need to get rid of a stock or share – you’ll have a harder time finding someone to sell to. Additionally, even some of the most popular stocks can have very wide spreads in the premarket. Despite this, there are benefits to trading in a premarket environment. For instance, if you know some important news about your stocks, you can get into the market ahead of the masses and make crucial changes to your portfolio.
Choosing a Premarket Trading Strategy
Some people trade in the premarket because it’s more convenient for them – we don’t all have the time to communicate with our brokers between 9:30 am and 4:00 pm. Additionally, the pre-market does offer a chance to take advantage of sudden changes in your stock prices. However, like any trading campaign, it’s essential to make sure that you have the right strategy to guide you. Do your research and make sure that you’re comfortable before you dive into the complexities of after-hours trading.
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Founder Dinis Guarda
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