Premarket Trading

Premarket trading refers to the buying and selling of Securities on an exchange before the official market opening. This trading occurs typically between 4:00 AM and 9:30 AM EST in the U.S. Stock market, allowing investors to react to news and events that may influence Stock prices.

For example, if a company announces better-than-expected earnings before the market opens, traders may buy Shares during premarket hours, driving the price up. Conversely, if a company faces negative news, such as a scandal or disappointing earnings, traders might sell Shares, causing the price to drop even before the market opens.

Cases of significant premarket activity often involve major news events, such as Mergers and Acquisitions or changes in executive leadership. Traders use premarket trading to position themselves ahead of the regular session, often seeking to Capitalize on anticipated price movements.