Did you know that you can trade outside of regular market hours? With extended-hours trading, you can trade before markets open and after they close. If youre someone with a busy schedule, pre-market and after-hours trading may work for you.
Ready to Beat the Morning Bell? Here’s Your Pre-Market Trading Roadmap
Ever watched a stock skyrocket before the market officially opens and thought “Dang I wish I could’ve grabbed some of that action!”? Well, my friend, you absolutely can—it’s called pre-market trading, and it might just be your ticket to catching those early morning moves before everyone else jumps in.
I’ve been trading pre-market for years now, and while it definitely has its quirks, the opportunity to react to overnight news before the crowds can be a game-changer for your portfolio In this guide, I’ll walk you through exactly how to buy stocks in pre-market hours, the potential benefits, and yes—the very real risks you need to understand
What Exactly Is Pre-Market Trading?
Pre-market trading is exactly what it sounds like—trading that occurs before regular market hours. While normal trading on major exchanges like the NYSE and NASDAQ runs from 9 30 a.m. to 4 00 p.m. Eastern Time pre-market trading can start as early as 4 00 a.m. and runs until the regular session begins.
Think of it as the VIP early access to the trading day. During these hours, investors can react to:
- Overnight earnings announcements
- Major company news
- International market developments
- Breaking economic or geopolitical events
The key thing to remember is that pre-market trading works differently than regular hours trading—it has its own special rules and characteristics.
Pre-Market Trading Hours by Exchange
Not all exchanges offer the same pre-market hours:
| Exchange | Pre-Market Trading Hours (ET) |
|---|---|
| NYSE | 4:00 a.m. – 9:30 a.m. |
| NASDAQ | 4:00 a.m. – 9:30 a.m. |
| TSX (Toronto) | No pre-market trading |
How to Actually Buy Pre-Market: Step-by-Step Guide
Ready to start trading before sunrise? Here’s how to do it:
1. Choose a Broker That Offers Pre-Market Trading
Not all brokers provide pre-market access, and those that do might have different hours:
- Interactive Brokers: 4:00 a.m. – 9:30 a.m. ET (IBKR Pro); 7:00 a.m. – 9:30 a.m. ET (IBKR Lite)
- Charles Schwab: Orders placed from 8:05 p.m. (previous day) to 9:25 a.m., with execution between 7:00 a.m. – 9:25 a.m. ET
- E*TRADE: 7:00 a.m. – 9:30 a.m. ET
- Webull: 4:00 a.m. – 9:30 a.m. ET
- Robinhood: 7:00 a.m. – 9:30 a.m. ET (trades may execute as early as 8:58 a.m. ET)
- TD Direct Investing: Offers pre-market trading for U.S. securities (but not for TSX)
2. Understand Order Types for Pre-Market
Here’s where things get a bit different:
- Only limit orders are accepted during pre-market hours (no market orders)
- Orders must be executed through electronic markets like ECNs (Electronic Communication Networks)
- Market makers cannot execute orders until the 9:30 a.m. ET opening bell
3. Place Your Pre-Market Order
- Log into your brokerage account
- Select the stock you want to trade
- Choose “limit order” (you must specify your maximum buy price or minimum sell price)
- Indicate that you want the order to be valid for “extended hours” or “pre-market”
- Review and submit your order
Remember: Your broker’s trading platform might have specific settings for enabling pre-market trading, so check their help section if you don’t see the option.
Why Would You Want to Trade Pre-Market Anyway?
There are some pretty compelling reasons to consider pre-market trading:
1. React to Overnight News First
Imagine a company announces blowout earnings at 7:00 a.m.—by trading pre-market, you can potentially position yourself before the regular session rush.
2. Fits Your Schedule
If you’ve got a busy day job that makes trading during regular hours impossible, pre-market might be your chance to actively manage your investments.
3. Potential Price Advantage
In some cases, you might score a better entry or exit price than what would be available once regular trading begins. This is especially true when big news breaks overnight.
As one experienced trader told me, “I made some of my best trades reacting to earnings reports at 6:30 a.m. while most people were still hitting the snooze button.”
The Risks: Why Pre-Market Trading Isn’t for Everyone
Before you set your alarm for 4 a.m., you should know the very real downsides:
1. Limited Liquidity
Pre-market trading is characterized by much lower volume than regular hours. This means:
- Fewer buyers and sellers
- Wider spreads between bid and ask prices
- Potentially difficult to execute trades at desired prices
2. Higher Volatility
With fewer participants, price swings can be extreme and unpredictable. A stock might move 5% pre-market only to reverse course completely when regular trading begins.
3. Institutional Advantage
You’re competing against professional and institutional traders who have deeper pockets and better access to information. It’s not exactly a level playing field.
4. Execution Risk
Due to the limit order requirement, there’s no guarantee your order will be filled. If the market moves away from your limit price, your order might sit unfilled.
5. Wide Bid-Ask Spreads
The difference between what sellers want and what buyers will pay can be much larger pre-market, which can eat into your profits or increase losses.
Smart Strategies for Pre-Market Trading Success
If you’re still interested in pre-market trading after understanding the risks, here are some strategies that might help:
1. Focus on Liquid Stocks
Major index ETFs like SPY (S&P 500 ETF) and highly traded blue-chip stocks tend to have better pre-market liquidity than smaller companies.
2. Use Limit Orders Wisely
Set your limits at prices you’re truly comfortable with. Don’t chase prices in the pre-market just because you’re afraid of missing out.
3. Watch for Catalysts
Pre-market moves are often driven by specific news like earnings, FDA approvals, or major business developments. Know what’s moving the stock.
4. Don’t Over-Commit
Limit your pre-market positions to a smaller percentage of your portfolio than you would during regular hours.
5. Consider Using Alerts
Instead of actively trading pre-market, you can set alerts to notify you of significant pre-market moves, then prepare your strategy for the regular session.
Real Talk: Is Pre-Market Trading Worth It?
In my experience, pre-market trading requires a certain temperament and risk tolerance. I’ve seen incredible opportunities, but I’ve also seen traders get burned badly by thin liquidity and volatile moves.
Pre-market trading works best for:
- Experienced traders who understand market mechanics
- Investors who need to react quickly to specific news
- Those with strong risk management systems
It’s probably not ideal for:
- Beginners still learning trading basics
- Investors with low risk tolerance
- Those without a specific strategy for extended hours
FAQs About Pre-Market Trading
Can I cancel a pre-market order?
Yes, most brokers allow you to cancel unfilled or partially filled pre-market orders, just like during regular trading hours.
Do all stocks trade in pre-market?
No. While many stocks are available for pre-market trading, not all of them will have active trading or liquidity during these hours.
Can I use margin for pre-market trading?
Generally yes, but check with your specific broker as margin requirements might differ for extended hours trading.
Will my pre-market order automatically carry over to regular trading hours?
It depends on your broker and the specific instructions you give. Some brokers require you to specify whether an unfilled pre-market order should be valid for the regular session.
How do I see pre-market prices?
Most brokerages that offer pre-market trading will show extended hours quotes in their platforms. There are also financial news websites that display pre-market activity.
Final Thoughts: Is Pre-Market Trading Right for You?
Pre-market trading can be an exciting way to get ahead of market-moving news and potentially find opportunities before the regular crowd jumps in. But it’s not without significant risks and challenges.
My advice? Start small. Maybe watch pre-market action for a while before placing actual trades. Learn how your favorite stocks behave during these hours. And when you do start trading pre-market, use smaller position sizes until you get comfortable with the different dynamics.
Remember, the stock market will always be there tomorrow—no single pre-market opportunity is worth taking excessive risk or trading in a way that makes you uncomfortable.
Happy (early) trading!
Risks associated with pre-market and after-hours trading
Liquidity: If there are a large number of orders in the market, the liquidity of a security is considered to be high. However, with very low levels of liquidity during pre-market and after-market hours, there is no guarantee that a certain trade will be executed. The risk is that your order may be partially executed or not executed at all.
Volatility: Change in the price of a security during trading hours is known as volatility. Due to a smaller number of participants in extended hours, trading can be volatile and result in price swings.
The spread: This refers to the measurable difference in price between what a security can be bought and sold for. With lower liquidity and higher volatility, the spread may be wider during pre-market and post-market hours.
Availability: During pre-market and after-hours trading not all stocks are available to trade. Plus, only limit orders are available to investors during these extended hours.
Certain institutional and major investors may choose to simply refrain from pre-market and after-market trading, regardless of market shifts or events. Due to this, its possible for a stocks price to fall sharply during extended hours trading only to rise when the markets open the following day.
Accessing extended hours market data
If you have a brokerage account, you can use its information services to access detailed after-hours market trading data. This is usually provided for free.
For example, with TD Direct Investing you can enter pre-market or after-hour orders online using WebBroker or Advanced Dashboard for eligible securities.
If you dont have a brokerage account, there are several sites that offer free access to pre-market and after-hours data.