Dow Pre Market: How It Influences the Market Price
Dow Pre Market
Typically, traders focus on forecasting the energy and direction of market activity when the Dow pre market opens.
Political and economic events that occur at night and the opening or closing of the other exchanges will affect the market.
Every amateur or professional investor should know when the New York Stock Exchange opens. Regardless of the country or asset being traded, Wall Street time sets the tone of the game.
Major stock indices open when the New York Stock Exchange opens.
When Does The New York Stock Exchange Open? – Dow Trading Hours
At 9:30am the call to the New York Stock Exchange rings. ET opens, but stock trading starts earlier.
Normal trading hours on Wall Street, except for US futures hours, are Monday through Friday, 9:30am ET to 4pm ET.
The US stock market is open year-round during those hours, unless it’s a Wall Street holiday and it’s closed, or a partial holiday, when it closes at 1pm ET.
However, electronic transactions can be made before 9:30am or after 4:00pm, known as pre-market trading and after-hours trading, respectively.
- Premarket: 4:00am – 9:30am.
- Open market: 9:30am-4:00pm.
- After market: 4:00pm – 8:00pm.
Dow Pre Market Time on Wall Street
The Dow pre market is available from 4:00 am until the US market officially opens at 9:30am.
However, until around 8:00 am the volume is usually small and the number of trades is very small. Until a few years ago, institutional investors were the only investors working in the Dow pre market.
Nowadays, given the progress and implementation of electronic trading, all individual investors with basic knowledge can buy and sell shares. Although, as we will see later, it is not recommended for beginners to trade the pre-market.
Should You Trade the Dow Pre Market?
As in other particular trading situations, the answer might be no. The reasons are:
- Biased view of the market.
Many electronic brokers show only a few reversals on the market. You may not be able to trade certain assets or only see the price of a limited number of shares.
- Lack of liquidity.
The market concentrates the vast majority of operations during its regular hours, from 9:30am to 4:00pm Liquidity in most of the relevant shares in the US market is very high, and purchase and sale orders are easily executed.
On the other hand, in the Dow pre market, your limit order may take some time or not be filled at all due to a lack of buyers and sellers.
- Very wide spreads.
The difference between the bid price and the ask price of the stock is usually larger during the Dow pre market than it is on normal trading hours. The result is that as soon as you enter a position, by the time you want to exit, you have already lost a lot.
- High volatility.
In the Dow pre market you can see price fluctuations of several percentage points in a matter of minutes.
Illiquidity, the size of the spread, and the actions of large investors can cause sudden fluctuations in share prices.
- Compete with professional dealers.
Always remember: professional investors have more and better information than you.
Factors That Affect Stock Market Prices and The Dow Pre Market
In the stock market, rates change daily, and sometimes they make sense, but often they don’t, especially in the short term.
If you plan to invest in the stock market, it’s important to understand why stock prices go up and down, as your investment will depend on it. If you want a quick answer to why stock prices fluctuate, it’s pretty simple, it’s the law of supply and demand.
As more and more people buy shares of a particular company, the demand for them increases and the available stock (supply) decreases, so the price increases. On the other hand, if many people sell the shares, the demand for them will decrease, and there will be more free shares, so the price will decrease.
News And Investment Funds
The news is one factor that can make the stock market go up or down, especially in the short term. You have to know which news is really worth listening to and which is not.
Most news doesn’t affect long-term investors much. If you trust a company you’re investing in, and a story that depresses the stock price is published, unless there’s extreme news that 50% or more of the market is going to disappear, don’t worry.
Investment funds move a lot of money. When they decide to buy or sell a stock, it will definitely affect the price.
What large mutual funds typically do is hold or transfer funds to other investment products to create a sense of security.
These changes add up to billions and billions of dollars, and when they decide to do so, the changes will have a significant impact on stock prices. They do this primarily to enter industries that are temporarily safer or where they see better returns.
«Fear Of Missing Out» And «Hype»
The word «FOMO» is an abbreviation for the proverb «fear of missing out», which refers to a person’s fear of missing out on a good opportunity, which is caused more by emotions such as fear and anxiety than by reason.
Hype is another term that means to strongly encourage something, to exaggerate its importance or benefits. These two things tend to have a big impact on the rise and fall of share prices in the stock market, and it’s an emotional game that needs to be played very carefully.
The «FOMOphobia» frenzy, thinking that if they don’t get in now, they will miss out on a whole winning streak and that they are fools for not taking advantage.
This pattern has been repeated multiple times; we had Bitcoin in 2018, the medical marijuana industry in 2019, and it has happened with some tech stocks in 2020. It takes a lot of emotional control not to get caught up in it, and it’s important to know how to master it if you are going to invest in the stock market.
Automatic Buy and Sell Orders
These buy and sell orders are one of the biggest contributors to big swings in stock prices, especially when they are falling.
Automated buying or selling of shares is when you ask a broker to buy or sell a certain amount of shares once the share price reaches a certain amount. It also has a huge snowball effect. This is very bad for investors.
Company Buyback
A «corporate buyback» is when a company buys more shares for itself. This usually happens when the price of a stock drops significantly and the company sees this as an opportunity to increase its stake in the company.
This is usually a good sign and leads to higher share prices because it shows that companies are showing self-confidence by putting their money into them, betting on their growth, and attracting more investors.
However, it can also be abused. In some cases, companies make buybacks just to look good and attract more investor money to their companies in the stock market, spending the money irresponsibly.
Twitter, Catastrophes, Governments…Everything Influences the Dow Pre Market
Twitter has become one of the factors contributing to the market price of shares. It gives the CEO and the president the freedom to say what they want, when they want. And it’s one of the things that has the biggest impact on stock market prices.
A global catastrophe is understood to mean plagues. Epidemics, massive diseases, earthquakes, hurricanes or any event that is out of control and could wipe out a large part of the population, or adversely affect the global economy. This is a very important reason for the sudden rise or fall of the stock market.
Politics and government includes conflicts, wars, trade wars, civil wars, party changes, everything related to the government and relationships with other people.
That is why it is recommended to invest in companies that are located in several countries and worldwide, so that you do not depend only on the economy of one country.
The Most Important Thing to Consider to Trade the Dow Pre Market
We have to consider the most important factor that affects share prices in the stock market, and that is the company’s quarterly earnings reports.
Compared to others, this is the only one that we think is really important. Performance reports are reports that a company produces each quarter, showing all the numbers, the main problems. The main achievements, and the forecasts for the future.
Report dates are very interesting and it is better to pay attention to them because they are the dates when your investments can go up or down significantly and many buying opportunities can appear.
If you are considering entering the world of pre-market trading, visit NoticiaGamer for more information and tips on how to start.
