Pre-market stocks

We outline how pre-market stock trading works and why you might want to buy or sell stocks before markets officially open.

How pre-market trading works Learn more
Commonly asked questions See FAQs

While most stock trading takes place during a stock market’s official opening hours, events that can affect a stock’s price can happen outside of this period. If you want to take advantage of such opportunities, you’ll need to find a broker that offers out-of-hours trading. Read on to find out more about pre-market stocks and how to buy and sell before markets open.

What is pre-market trading?

The world’s stock markets have official hours during which they are open for investors to buy and sell shares, or to speculate on future stock performance through spread-betting or CFDs. For example, the London Stock Exchange’s trading hours are from 8am to 4.30pm.

Pre-market trading happens before a stock market officially opens for the day. It lets investors buy and sell stocks ahead of the market opening.

It’s also possible to trade stocks after a market closes. This is known as after-hours trading.

What are pre-market stocks?

We appreciate that this is probably blindingly obvious, but just for the avoidance of doubt pre-market stocks are stocks that are traded in pre-market hours. The stocks you can trade in pre-market will depend on the broker or share-dealing platform you use, and what stocks they make have access to for trading.

How do I trade pre-market stocks?

During normal trading hours, buy and sell orders are placed directly on the relevant stock exchange. Pre-market trading, however, works a bit differently.

You’ll still need to make trades via a broker or online share dealing platform. But, unlike standard-hours trades, buy and sell orders are placed using a sort of virtual marketplace for buying and selling stocks. In the US, these virtual marketplaces are often called electronic communication networks (ECNs), or sometimes alternative trading systems (ATS). In most of Europe, they’re known as multilateral trading facilities (MTFs).

The key difference is that, unlike with standard-hours trading, with after-hours stocks you can only place limit orders. Limit orders set a price on on how much you’re willing to buy or sell an asset for. Your order will only be fulfilled if it can take place at the limit you’ve set (or better).

Why are stocks traded before the markets open?

While most trading happens during standard market hours, the reality is that not everything that affects a stock’s performance is going to take place between stock-market imposed time limits. Natural disasters and macroeconomic events rarely happen to a fixed schedule. And even events that are more within a company’s control, such as the announcement of new financial results, may happen before a stock market officially opens.

Pre-market trading gives on-the-ball traders the opportunity to take full advantage of price changes that happen before the markets open. For some, this is a definite benefit given that prices tend to move rapidly when news breaks early. The speed of price changes is often the result of lower trading volumes and liquidity.

All that said, for long-term investors who embrace a buy-and-hold approach, any short term volatility in the stocks they hold will typically be ironed out in the long term. So pre-market trading tends to be the reserve of experienced investors, including those with a focus on day trading.

What are the risks of pre-market trading?

Danny Butler

Finder insurance expert Danny Butler answers

As is usually the case with investing, the increased opportunity for reward offered by pre-market trading comes with a bunch of risks. Some are associated with the fact that there are fewer people buying and selling at that time. This can make for lower liquidity and, given that you can only trade pre-market stocks based on limit orders, there’s no guarantee that you’ll be able to buy or sell at the price you want.

Prices tend to be more volatile when trading outside of normal hours, too. Outside of these hours, breaking news can have a dramatic impact on share price, causing them to shoot up or down. This can make for quick wins if you get it right. But there’s also the risk that you might net what seems a great deal only for a stock’s fortunes to reverse just as rapidly. It’s a risky strategy. Combined with low liquidity, this could leave you left with stocks you’re desperate to offload, but can’t, for example. High volatility and/or low liquidity can also lead to a wider spread (the difference between the buy and sell price).

Do all brokers offer pre-market trading?

After-hours trading requires access to special systems and involves third parties, so it can involve more effort and expense for brokers to offer than regular trading. Because of this, while many brokers offer pre-market trading, not all do. It also means that you may need to pay more for pre-market trades than those that take place during normal stock market opening times.

What are the stock market pre-market hours?

In the UK, the London Stock Exchange officially opens at 8am. Different brokers may offer slightly different pre-market trading hours, but you can probably expect to be able to buy and sell pre-market stocks between around 5 and 7am.

If you’re looking to trade US stocks, standard trading hours for the two biggest US exchanges (the New York Stock Exchange and the Nasdaq) are 9.30am to 4pm Eastern Daylight Time (ET). That’s 2.30pm to 9pm UK time. Typical pre-market trading hours for US stocks are 8am to 9.30am ET (1pm to 2.30pm UK time), though you may find some brokers that let you trade earlier than this.

What stocks are available for pre-market trading?

The stocks available for pre-market trading will depend on the share dealing provider you use. Check that any potential brokers or platforms offer the stocks you’re interested in trading before you open an account. You should be able to an your online platform’s stock listings or search function to find out what after-hours stocks it lets you buy and sell.

Pros and cons of pre-market stocks

Pros

  • Able to trade outside of standard hours, which may be more convenient
  • Opportunity to make the most of price changes that take place before a stock market officially opens

Cons

  • Stock prices likely to be volatile and potentially quite different to normal trading hours
  • Less liquidity as fewer trades take place pre-market.
  • Not every broker offers pre-market trading.

Bottom line

If you want to take advantage of the stock price swings that can take place before a stock market opens, or a stock market’s standard hours aren’t terribly convenient for you, then pre-market trading may be of interest. But not every provider offers it, it can be more expensive, and it carries a number of risks due to high price volatility and typically low liquidity. So it’s likely to be best for experienced investors who know what they’re doing. If you’re investing for the long term with a buy-and-hold strategy, you’re probably fine to stick with trading during standard hours.

Frequently asked questions

All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.

More guides on Finder

  • How to buy SPDR FTSE UK All Share UCITS ETF Acc

    Ever wondered how to invest in FTAL ETF? Learn more about it now and find out where you can invest in it. Compare ETF brokers to start investing today.

  • How to buy Franklin FTSE United Kingdom ETF

    Ever wondered how to invest in FLGB ETF? Learn more about it now and find out where you can invest in it. Compare ETF brokers to start investing today.

  • How to buy HSBC FTSE 100 UCITS ETF

    Ever wondered how to invest in HUKX ETF? Learn more about it now and find out where you can invest in it. Compare ETF brokers to start investing today.

  • How to buy Flutter Entertainment shares

    Thinking about buying shares in Flutter Entertainment? We explain how to do it and compare a range of providers who will give you access to global markets.

  • How to buy Dettol shares | 4377p

    Sales of Reckitt Bencksier products like Dettol have risen due to coronavirus. Here’s how you can invest in Dettol, by buying Reckitt Benckiser shares.

  • How to buy AT&T shares

    Ever wondered how to buy shares in AT&T? We explain how and compare a range of providers that can give you access to many brands, including AT&T.

  • How to buy Wincanton shares

    Ever wondered how to buy shares in Wincanton? We explain how and compare a range of providers that can give you access to many brands, including Wincanton.

  • How to buy United Utilities Group shares

    Ever wondered how to buy shares in United Utilities? We explain how and compare a range of providers that can give you access to many brands, including United Utilities.

  • How to buy Relx shares

    Find out how to buy shares in RELX, see its share prices over the last three months and check out our must-do checklist if you’re looking to invest.

  • How to buy Reach shares

    Ever wondered how to buy shares in Reach? We explain how and compare a range of providers that can give you access to many brands, including Reach.

Go to site