How to Buy Stocks Before the Market Opens
If you’re new to trading, you probably have a lot of questions about how you can take advantage of the ever-changing market to make money and grow your wealth. A lot of experts will tell you that timing is crucial when it comes to succeeding in the trading world. Not only do you need to know when to buy at the right time to get a low price on your stocks, but you also need to know when to cut your losses and sell. However, there’s a lot more to timing your market than you might realize. For instance, most new traders don’t realize that they can continue to work on their financial portfolio after the official stock market closes, and before it opens.
Your opportunities don’t have to end just because the stock market isn’t officially open anymore. Investors can continue to make money through their brokers, using something called an Electronic Communications Network. Here, we’re going to answer the question “What is premarket trading,” and help you discover how you can trade outside of market hours.
What is Premarket Trading?
There are two kinds of trading that can take place outside of traditional stock market opening times. The first option is pre-market, which allows you to buy and sell stocks when the market has yet to open – often anywhere between 4 am and 8 am. On the other hand, you can also perform various stock market actions after the market closes, which is known as aftermarket.
For a lot of people, the concept of premarket can be quite compelling. It means that you can get one step ahead of the competition if you’re lucky enough to find someone else to trade with in the early hours of the morning. If your broker offers premarket or aftermarket, then you’ll be able to respond instantly to any financial or news reports released by companies that you’re investing in. This means that you can get ahead of a huge price drop and save some money, or potentially make some extra cash.
Of course, like any strategy, premarket comes with its risks. For instance, the markets that are available outside of traditional trading hours are far less liquid than you may like. It’s much harder to find someone who you can trade with during these times, which could mean that you get stuck in an awkward position.
How Can You Trade Before the Market Opens?
If you decide that trading outside of typical market opening hours is a good move for you, then getting started might be simpler than you think. As mentioned above, the easiest way to engage in premarket is to find a broker who will allow you to connect with other people through something called an electronic communications network. The ECN offered by brokers will allow you to find your desired stock, enter a specific order, and monitor purchases all outside of the standard hours. This means that you can get ahead of other people in your space. However, you will need to find the right broker. Not all companies will be able to offer premarket trading.