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Preparing for Premarket Trading: The Basics

It's common knowledge that you need to be available to adjust your positions with your various assets during these times if you want to make the most of the thriving NYSE environment. Handling stocks during the open hours of the stock exchange is a good idea, as it allows you to benefit from plenty of volume and low volatility when you're looking for opportunities to make money. However, it's not the only option you have. More advanced investors who understand the stock space will also consider premarket trading and after hours trades too. Premarket trading is what happens when you buy and sell your securities, stocks and assets before the NYSE doors open for the first time each day.

Premarket Trading Preparation

Learning how to day-trade your stocks and assets takes a great deal of discipline, practice and focused. To be at your best, you need to be calm, focused, and informed. However, sometimes, you can make a better investment decision for your financial future, if you get out of bed a little earlier than everyone else. With premarket trades, you get to take advantage of information that appears in the market before anyone else. Many companies deliberately wait to release news stories that will affect their value after the market closes.

While it might not be a good idea to instantly use this information to make decisions during after-hours sessions, giving yourself time to digest the data and come back to your stocks in the morning, before anyone else, can be a valuable strategy. Exploring the premarket also gives you the opportunity to take advantage of information that only gets distributed during the early hours of the morning, such as recommendations from wall street research firms, and upgrades or downgrades in the industry.

Finding Catalysts for the Premarket

One of the first thing you'll learn about the premarket environment, is that most stocks won't trade as quickly or as easily as they did during the day. That's because there's not as much volume in the premarket and after-hours sessions as there is during typical opening hours. With that in mind, you need to be 100% sure that you're making the right decision when you put a stock up for sale or try to purchase a new security.

The risk involved with managing your stocks and investments outside of regular hours is why it's so important to have the right strategy in place. This is something that you'll develop more aggressively with time and insights from your mentors. However, the best way to get started is to direct your attention first to the price action and volume of each stock you're interesting. Since most assets don't move much during the early hours of the morning, anything that's selling with a decent amount of volume will be selling because there will be a catalyst in place. To make the right trading choice, it's up to you to find out what's forcing the stock to move, even outside of its regular hours.


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