The concept of premarket stock trading is relatively new to the financial industry – at least in the US. It first emerged in 1991, when the New York Stock Exchange responded to the demand for round-the-clock global trading hours. Other countries at this point were already offering after-hours trading sessions, and the US was forced to catch up.
Since then, computerized and electronic trading solutions across borders have become increasingly popular and common. Every day, investors visit the premarket trading arena to buy and sell assets that they’re ready to move through the ECNs offered by their brokers. Just about anyone has access to premarket trading today – but that doesn’t mean that this strategy will be right for everyone.
Is Premarket Trading a Good Idea?
In the right circumstances, premarket trading can represent an excellent opportunity for experienced investors with a lot of knowledge in the market that they’re investing in. If you know how to respond to sudden changes in the marketplace, and you’re ready to make a purchase and sell assets based on last-second news reports, then premarket sessions may be a good idea for you. However, it’s worth noting that premarket trading can also be a lot riskier than buying and selling assets during the regular hours of the stock exchange. For this reason, it’s a lot more common for investors to simply watch what’s going on in the premarket, rather than participating in it.
If you do decide to get involved, it’s important to remember that trading in the premarket puts you in direct competition with professionals that have a lot of years of experience over you. If you’re still drawn to trading ahead of schedule, then it’s often a good idea to have the advice of a financial expert on your side. Finding the right financial advisor or trading mentor to guide you can be a great way to reduce your risk of losing money before the stock market officially opens.
Making the Most of Every Trading Session
On the one hand, a premarket trading session gives investors the chance to jump in on the ground floor of an incredible opportunity. You can sell assets fast if you read the news that indicates a company is about to go bust. On the other hand, you might be able to buy extra shares in an opportunity that could earn you a lot of cash when the stock market opens. However, either way, you’re going to need an excellent strategy to ensure that you don’t end up losing your hard-earned money.
Pre-market trading comes with a lot of risks, which is why most people will avoid this strategy unless they’re absolutely sure that a certain news event is going to make a big difference to the way that they manage their assets. Before you even consider getting involved with early-hours trading, make sure that you understand what your risk tolerance is, and that you’re comfortable with the fact that you might end up losing more money than you save if you make the wrong choice.