I've been investing, swing trading and day trading for several years, and whilst I understand the mechanism of trading outside regular market times, I never understood why it even exists. Never found any explanation.
I came to the conclusion that trading outside regular market hour is for the more expert ones, in fact in most of the retail trading platforms don't allow by default to trade outside regular hours.
So, why I constantly see the market direction going against what happens on pre market for example? Or at least with no correlation at all.
I see the price going up or down a lot before 9:30 , just to see the opposite happening right at market open.
Why would some "expert" buy a lot in pre market just to see an army of retail traders starting to short at market open?
Probably they didn't expect that, but then, why even trading out of the regular market hours at all?
Let's take a practical example from yesterday 9th March: great pre market news for American steel, and X was up 3% in pre market. The company is solid, the news was in favor, pre market +3%, and at market open the price dropped to -2% . 5 points % for nothing, ... clearly a bunch of bears shorting.
This is a low float stock, so retail investors can overpower institutional money, but still, I don't get it.
Now.... who are those who bought X in pre market? institutional experts or ?
I never understood the benefits and the reasons of trading outside the market hours... if someone has some proven knowledge about this topic, please by all means, share.
Many Thanks!
Alex
I came to the conclusion that trading outside regular market hour is for the more expert ones, in fact in most of the retail trading platforms don't allow by default to trade outside regular hours.
So, why I constantly see the market direction going against what happens on pre market for example? Or at least with no correlation at all.
I see the price going up or down a lot before 9:30 , just to see the opposite happening right at market open.
Why would some "expert" buy a lot in pre market just to see an army of retail traders starting to short at market open?
Probably they didn't expect that, but then, why even trading out of the regular market hours at all?
Let's take a practical example from yesterday 9th March: great pre market news for American steel, and X was up 3% in pre market. The company is solid, the news was in favor, pre market +3%, and at market open the price dropped to -2% . 5 points % for nothing, ... clearly a bunch of bears shorting.
This is a low float stock, so retail investors can overpower institutional money, but still, I don't get it.
Now.... who are those who bought X in pre market? institutional experts or ?
I never understood the benefits and the reasons of trading outside the market hours... if someone has some proven knowledge about this topic, please by all means, share.
Many Thanks!
Alex
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