Do check if it would be cost-effective if you wait for the normal trading to start to buy the stock. The pre-market trade in a market order could get rejected because the market is not open. Make sure that it is entered as a limit order only. The bid/ask range could be very high and this may end up impacting your trade negatively.
There are times when you will notice that some of the major moves in the stock market have happened outside of the normal trading hours. The volatility in the stock prices are driven by what happens outside the market hours and this creates a lot of opportunities to trade and profit from.
The premarket session is used by most traders to guess the market’s performance and how it may open. Many traders, however, focus on trading only during the normal trading hours.
The economic indicators drive the price movement in the pre-market session. Most of the major economic news gets released before the trading day starts and the market starts reacting to the news. It also helps to set the idea of how the market would open that day.
The various economic reports that could affect the stock market pre-opening are the employment report, GDP numbers, weekly jobless claims and the retail sales numbers. The market will react to numbers that are far away from what the analysts had forecasted. This creates volatility in the market and thus a trading opportunity.
The companies that are publically traded release their earnings reports every quarter. This starts one or two weeks after the end of each quarter. When the earning reports are released before the market opens or after a day’s close then this causes a lot of volatility in that particular stock in the next day pre-open session.
When a company’s earnings expectations are far above or far below what the analysts had expected then this leads to a major movement in the stock. The traders want to either buy or sell that particular stock on Crypto Robot 365 before the other traders and this leads to a reaction in the premarket session.
There could also be some major news that gets reported after the market closes or in the weekend that can impact the premarket movement of the market. Any war or a natural disaster is unexpected and these cause a surprise in the market. If your brokerage lets you trade during the pre-market session then you have an edge over your peers and get to position yourself better.