Did you know that you can make big money from premarket trading? There is a great opportunity before the market even opens to jump in and find those large moves. It’s often a mistake that traders thing you can only trade when the market is open but there are specific products that are open earlier or around the clock for that matter that traders can take advantage of.
What to trade before the market opens?
There are many products out there that we could potentially trade pre-market. There are assets that are open throughout all hours like Forex and Futures markets. Then there are those that close at a specific hour and re-open. Like the US stock market and the US options market. Typically opening at 9:00 am and closes at 4:00 PM EST. There are some brokers that allow some pre-market and post-market trading for stocks and options.
However, we like to trade the futures market more so than other markets. The futures market has immense liquidity in the evening. It’s rare to have an empty latter on the best bid and best offer. Even at midnight.
Pre-market Stock Trading.
Do people trade stocks pre-market? The simple answer is yes, the better answer is, you shouldn’t as a newer trader.
Stocks, to begin with, have less liquidity than the futures market overall. The orders on the stock market have a wider spread in general. When compared to the futures market.
Another reason we tend to shy away from pre-market stock trading. Because many brokers may not offer the option. The stock market typically opens at 9:30 am EST and closes at 4:00 PM EST. That doesn’t mean that some of the trading stops before and after. There are some orders and trades in the mix but they do not trade with much liquidity pre-market. There are some stragglers and there are higher liquidity assets. However it is not a big crowd arena, there are not that many participants premarket. Which could cause slippage and poor fills. The futures market is where premarket trading is done.
You can use the news events that happen before the market opens to gauge what the market may do when it opens. Or alternatively take advantage of those moves in the futures market. Trading the futures market is really advantageous for traders that want to trade the US market where a lot of liquidity lies. The futures market lets traders from all over the world, in different timezones, trade the US market whenever they can. The futures market is only closed on the weekend and one hour a day. Between 5:00pm and 6:00pm EST.
How to Trade pre-market?
Now that we’ve established what assets to trade, we can dive into the question more. Which futures assets make the best choice for us to trade?
The S&P 500 and crude oil futures markets are the most liquid assets in the futures market that we like to look at no matter the time of day. Pre-market trading is better done with the S&P 500 futures due to the influence of economic events that come out frequently pre-market. And here we are, dive, in the deep how to Make $1000 Daily From Crude Oil Futures Trading.
The tools that you need to trade the futures pre-market are no different from those that you use on a daily basis. You’ll need a futures trading platform, like Sierra Charts that has order flow and all the other charting tools. Also a data feed provider, and a broker. For example, AMP futures that provide you with data so you can get a live data feed.
From here, it’s business as usual trading the futures market. We have to understand when the better opportunities come by, based on the time of the session.
The best pre-market trading hours for the futures markets are around 6:00 am EST to 8:30 am EST. There is plenty of opportunity at that time. Take a look at the green rectangle below. Throughout the whole green rectangle, we’ve moved 24 points from top to bottom, then from the bottom to the top. Which is plenty of opportunity in our 1.5-hour window?
The next step is breaking down the structure of the market before you start trading premarket. Everything to the left of the green box should tell you where you’re getting long and where you’re getting short. The yellow candle tells us where we want to see price break for the long side to open up and the blue arrow is the line where we want to see price break so we can jump into the short.
In this specific scenario, we see a break of both, the buy-side temporarily so we can catch some of the upsides, but then understand where price flips for the shorts. We would look for the break and retest of that level and rinse and repeat until the trend is broken. Each time we see a move we’ll readjust the areas to identify where the next shorts are on and where the next longs are on.
If you want to learn more about premarket trading. We do it every day in the room, we have traders from different countries and timezones that trade at all hours of the night and day. We often see traders in the room at 7:00 am EST into the market open looking for trades. If you want to trade with them, take a look at our Elite Course.
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The information contained in this post is solely for educational purposes and does not constitute investment advice. The risk of trading in securities markets can be substantial. You should carefully consider if engaging in such activity is suitable for your own financial situation. TRADEPRO Academy is not responsible for any liabilities arising as a result of your market involvement or individual trade activities.