What is pre-market trading?

Many investors and traders watch the pre-market trading activity to judge the strength and direction of the market in anticipation of the regular trading session. Pre-market trading can only be executed with limited orders through an "electronic market" like an alternative trading system (ATS) or electronic communication network (ECN).

What does a limited trading volume in the pre-market mean?

The limited trading volume in the pre-market may provide a signal of weakness or strength that may not be borne out when the market opens and regular trading volumes are reached. For example, a stock that reports an earnings miss may be down significantly in pre-market trading but could reverse course and end the day higher in the regular session.

What time can a market maker execute a pre-market order?

Market makers are not permitted to execute orders until the 9:30 a.m. EST opening bell. Pre-market trading activity generally has limited volume and liquidity; therefore, large bid-ask spreads are common. Many retail brokers offer pre-market trading but may limit the types of orders that can be made during the pre-market period.

What time can I trade in the pre-market & after-hours market?

Read More. Investors may trade in the Pre-Market (4:00-9:30 a.m. ET) and the After Hours Market (4:00-8:00 p.m. ET). Participation from Market Makers and ECNs is strictly voluntary and as a result, these sessions may offer less liquidity and inferior prices.