Pre And Post Market Trading: Why?

[cat3appr]

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

 

[Quantt]

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 think volume is major part of it, pre market volume is usually tiny, compared to the normal market hours...
One question I have is why not everyone trading pre market? A lot of volume in the market is driven be algo trading, HTF, etc, so why the pre market volume is so tiny...

 

[kalott]

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

"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,"

maybe someone wanted a higher price to short

just kidding..

 

[Quantt]

I think volume is major part of it, pre market volume is usually tiny, compared to the normal market hours...
One question I have is why not everyone trading pre market? A lot of volume in the market is driven be algo trading, HTF, etc, so why the pre market volume is so tiny...

To answer my own question, maybe the big money do not trade off market hours, because all the company news are usually sent off hours... Also one of the major brokers is planning to offer trading 24 hours for well known stocks and ETFs...

https://www.cnbc.com/2018/01/22/inv...k-market-24-hrs-a-day-with-td-ameritrade.html

 

[MasterOfCoin]

As the vast majority of retail investors don't have access to trade outside of market hours, this is a bit of a mute thread.

Not to say there is no merit in discussing the topic, but;

More of an academic discussion than anything else.