Pre market stock trading involves the buying and/or selling of particular stocks prior to the public opening of trading on that day. Regular trading hours are from nine o’clock in the morning to four in the afternoon, Monday through Friday (exceptions are Christmas Day, New Year’s Eve, and Thanksgiving Day), and continue daily through the closing bell in New York City. This type of stock trading does not involve the actual purchasing and sale of stocks, however.
Traders may be short-term investors who buy a few shares of stock at a time. Long term investors buy huge blocks of stock at once and then hold on to them for months at a time. Sometimes, these investors will wait for a particular company’s stock prices to rise or fall before making a major purchase. Many people who buy shares of stock in pre market stock trading never actually make a purchase. These investors are called day traders.
Short-term traders who use this method are called swing traders and they may not ever trade a position after making just a small profit. They are interested only in short-term profit, and if they feel they can hang on to their money for only a few days, they will go ahead and do so.
Investors who purchase stocks in pre market stock trading do so because of the perceived benefit to them of being able to purchase and sell large blocks of stock during times of market turmoil. The volatility of the stock market means there will often be large fluctuations in price. In addition, there are many factors that influence the market, such as a recession, an economic recession, a recession or the Federal Reserve raising interest rates. Day traders feel like they are able to capitalize on these fluctuations by taking advantage of the volatility of the stock market.
One reason why people participate in pre market stock trading is that they feel the stock market is so easy to get in and out of. This is why they see it as a lucrative opportunity to make a profit in a hurry. Since there is no paper trail to follow, day traders can jump on the first big move. and make a ton of money in a very short period of time.
Some long time investors are attracted to pre market stock trading because they believe it gives them greater protection against losses in the market. Because the purchase and selling of these stocks are done with the stock market in the state it is in, there is usually very little to be learned about a stock before someone makes a buying decision. There is very little room for guesswork when you do this type of trading. Since there is no paper trail, there is also less chance that there will be some sort of financial announcement or news event that will cause the price of a stock to drop, or rise.
Some day traders are known as scalpers. In order to become successful at this type of trading, they need to buy several stocks very quickly and then sell them all at once in one fell swoop. They often use this strategy when a certain stock is falling and they know it will rise. They will then buy it again, usually many times the amount they originally invested in the first transaction. By doing this they can realize a nice profit.
Some day traders have a very high tolerance for loss and can live with a lot of losses. They will still take the risk involved with pre market stock trading and buy a stock that falls as much as possible before making a second purchase. They may be willing to go as low as a single penny. They do not mind seeing a profit in the short term, but they do have a much lower tolerance for loss. Some traders do their day trading on autopilot, which means they just check the stock prices every hour of the day and then buy or sell them as they happen.