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Pre-market: Easy explanation [Video]

Pre-market: Easy explanation

In this video, you will learn about pre-market trading sessions in the US stock markets.

#premarket #stockmarket #wallstreetmojo #trading #investing

Chapters:
00:00 – Introduction
00:30 – What is pre-market?
01:33 – How does pre-market work?
02:36 – Who can trade in pre-market?
03:05 – Advantages and disadvantages
03:56 – Conclusion

What is pre-market?
The pre-market session begins at 4 and continues till 9:30 in the morning, till the regular trading session begins.

The pre-market session allows traders or investors to buy or sell financial assets in the stock exchange before the market opens for the regular trading session.

You should note one important thing in the pre-market: less liquidity and volumes lead to high bid-ask spreads.

(Explained in detail in the video)

How does pre-market work?
The pre-market session is an extension of the regular trading hours, and we can say that the US stock market is effectively open for around 12 hours a day.

Another important thing about the pre-market session that you should know is that unlike the normal trading session, where you can place both market and limit orders, in the pre-market session, you can trade using limit orders only.

Who can trade in pre-market?
Earlier, the pre-market session was made available only to institutional traders and investors like mutual funds, hedge funds, and other financial institutions.

But with time, the US stock exchanges opened the pre-market session to retail traders and investors.

Advantages and disadvantages
One of the biggest advantages of the pre-market session is that when companies announce their results after the market has closed or before the trading session begins, traders and investors can act on such events and build their positions.

Now coming to the disadvantages of the pre-market session, liquidity and volumes are seriously low as compared to regular trading hours.

As you already know, this, in turn, widens the bid-ask spread a lot.

Finally, some brokers may charge extra brokerage or fees from traders trading during pre-market. So this increases costs.

(Explained in detail in the video)

This was all about pre-market. Give this video a like and subscribe to the channel.

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