ANSWERS: 1
  • Most people think that trading can only be done during the hours of the stock market, but investors with the right software can engage in special stock trading sessions early in the morning before the stock market opens. This is known as premarket trading.

    Time Frame

    Normal sessions for stock trading are between 9:30 a.m. and 4 p.m. Premarket stock trading occurs between 4 a.m. and 9:30 a.m.

    Significance

    Investors engaged in premarket trading take advantage of the fact that some businesses report earnings before the market opens.

    Potential

    Investors can react quickly to changes in business earnings if they trade premarket.

    Benefits

    While risky, premarket traders can benefit by making quick decisions on sudden plunges in the marketplace before anyone else.

    Warning

    Trading can be more difficult in the premarket due to a lack of liquidity. Wider spreads between the bid and ask price can make getting a decent price on a stock more difficult. Premarkets are also more volatile.

    Source:

    Understanding Pre-Market and Afterhours Stock Trading

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