4. Premarket Trading Tips

Premarket Stock Trading

Before trying to place your first premarket order, it is important to watch premarket trading for some time to understand the entire process.

Premarket Trading Tips

Before jumping into trading during the premarket, make sure you know these rules:

  • You can only place limit orders
  • Orders are only good for that session, they do not carry over to the regular market session
  • Premarket sessions are typically much less liquid
  • Premarket orders are matched electronically through ECNs
  • Brokers can set their own rules for premarket trading, so make sure to check with them!

The platform provided to you by your broker should have tips on how to buy and sell shares during premarket sessions. Premarket orders are not executed as easily as those executed during regular hours.

Brokerage firms only accept limit orders (those directing the firms to sell or buy shares at a given price) in premarket. Your broker will not execute your order if the shares are not trading within the designated limit.

The orders have limitations as well: 25,000 is the maximum number of shares per order. Brokers only honor premarket orders for the precise session in which investors placed them.

There is no guarantee that premarket orders are placed before the opening bell if trading activity is significantly low, but it is certain that they are not carried over into the normal trading hours.

The procedure and cost of trading stocks during premarket hours also depends on the broker.

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