Pre-Market Trading
Pre-market trading is the buying and selling of stocks in an extended session before the regular market opens at 9:30 a.m. Eastern Time.
US stocks can trade before the official opening bell in what is called the pre-market session. Depending on the broker and trading venue, it can start as early as 4:00 a.m. Eastern Time and runs until the regular session opens at 9:30 a.m.
Pre-market prices often react to news that came out overnight, such as earnings reports, economic data or events in Asian and European markets. Investors watch pre-market moves for early clues about how the trading day might start.
Trading in this session differs from regular hours in important ways. Fewer people participate, so volume is lower and bid-ask spreads are often wider. Prices can be more volatile and may not reflect where the stock trades once the full market opens. Many brokers only accept limit orders during extended hours, and some order types, such as stop orders, may not be active.
Example: a company reports strong results at 7:00 a.m. Its stock closed at $60 the previous day and trades at $64 in the pre-market. When regular trading begins, the price might hold, extend the gain, or fall back.