Learning how to use the premarket and after-hours sessions for buying and selling isn’t easy. Trading is a complicated process that requires years of training and strategy to master. Even some of the most advanced investors will avoid getting involved with extended trading sessions because they know that they’ll be exposing themselves to greater risk, and lower liquidity.
However, that doesn’t mean that premarket trading isn’t right for anyone. If you can figure out how to identify the premarket gainers and movers in the industry during the early hours of the morning, then getting out of bed early could be an excellent way to earn more money. You’ll still need to be cautious with this method, as it requires you to think very carefully about the positions that you get into, but anything is possible with the right preparation.
Why the Premarket is Better than Afterhours
When people use the term “gainer” to refer to stock, they’re often talking about an asset that has the potential to gain a lot of value quite quickly. If you’re a day trader, then these are the kind of securities and positions that you’ll want to pay the most attention to, as they have the potential to make you the most money in both the short and long-term. While it’s challenging to pinpoint movers and gainers during the after-hours sessions, premarket trading can make it a little easier.
Remember, when you’re trading after hours, your session will still end several hours before the market opens again the next day. That means that you’ll have time for your position to change when the news is released in the relevant industry. On the other hand, if you’re trading in the pre-market, then you’ll probably continue buying and selling positions right the way through until the official opening bell rings. This gives you a chance to take advantage of any news you’ve seen through the night, without any dangerous gaps.
Looking for Gainers in the Premarket
One of the reasons that most people avoid trading in the premarket, is that there’s a great deal less liquidity. Fewer people are trading at this time, which means that you don’t have as many opportunities to buy and sell stocks. However, you can look for a potential gainer by examining possible catalysts in the market. For instance:
- Look at Volume First: Make sure that you pay attention to any stock that’s moving with volume – even in the premarket sessions. This is a sign that something significant is going to happen with this stock in the hours to come.
- Look at Index Futures: The overnight sessions will tell you which stocks have had the most movement up until now, which will help you to get ahead of other investors.
- Track the Headlines: Always pay close attention to what’s going on in the news. Any announcement from a company that affects its value will definitely help you to pinpoint gainers in the premarket. Just make sure that you’re checking official news channels, and not just reacting to rumors.