Premarket trading: How to Trade on Your Schedule

What happens when you read something in the news that has a huge impact on the potential value of your stocks and securities. Do you just wait around for the NYSE bell to ring at 9:30 am EST, hoping that no-one will beat you to making the right purchasing or sales decisions? Or do you take an alternative approach, and look into trading during the out-of-hours sessions instead?

Most people in the stock market don’t realize, but sales and investments don’t always have to happen on a single schedule. It’s possible to follow your own strategy for buying and selling securities either before the stock market opens for the day, or after it closes. To do this, all you need to do is learn about premarket stock trading and after hours trades.

How to Prepare for Premarket Trades

If you’re new to afterhours trading in the time before the opening bell rings, or after the stock market closes, then your best option may be to begin with premarket trading. In this case, your after-hours session will continue all the way up until the market opens at 9:30 EST. This means that if you make any mistakes with your positions, you’ll be able to get out of them relatively easily. On the other hand, in after-hours sessions, which close at 8-9 pm, you’ll be stuck waiting to the next day.

Premarket trading is the act of handling your stock and security investments before the market official opens. This allows you to take advantage of news alerts and other sudden changes in the industry before most other people would. The main issue with this strategy, is that there’s not a lot of volume to trade with. This means that if you want to be effective in the premarket, you’ll need to gather as much information as you can. For instance, think about what’s going to happen in the day ahead based on the news that you’ve gathered about downgrades and upgrades in the industry. Look at your risk strategy and think about how much you can afford to lose on sudden news announcements. Additionally, remember to pay close attention to social media, as these locations can deliver breaking news before anywhere else.

Making the Most of Premarket Trading

A trading strategy that works outside of the traditional hours of the New York Stock Exchange won’t be the right option for everyone. In fact, it’s generally for veteran traders rather than beginners, as you’ll need to know your way around the market well if you want to make some real money. However, when you use this plan correctly, it can be an excellent opportunity to make extra cash, evaluate your open orders, and even get rid of stocks that are no longer attractive to you. Ideally, if you’re just getting started with stocks, you’ll be better of practicing your trades in a paper environment before you start working with real money. Once you get used to making consistent wins in the standard market, you can think about experimenting with opportunities after and before the bells.  

About RJ Frometa

Head Honcho, Editor in Chief and writer here on VENTS. I don't like walking on the beach, but I love playing the guitar and geeking out about music. I am also a movie maniac and 6 hours sleeper.

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