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Trading Premarket and Postmarket Pros and Cons - YouTube

Channel: Timothy Sykes

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- Today I'm gonna talk about premarket

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and after hours trading.

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Stick around!

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(upbeat music)

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What's up?

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Tim Sykes, millionaire mentor and trader here,

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answering your questions.

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Today we're talking about premarket trading,

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after hours trading,

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all kinds of different kinds of trading.

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The stock market typically is open 9:30 a.m. Eastern

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until 4:00 p.m. Eastern.

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This is the U.S. stock market,

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but after hours adds a few extra hours before and after.

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You can actually start trading stocks at 8:00 a.m. Eastern,

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and if you trade the most active stocks,

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it's even 7:00 a.m. Eastern.

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And the market doesn't close at 4:00 p.m. Eastern.

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It actually closes at 8:00 p.m. Eastern.

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That's a hard cutoff time for all stocks.

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So what is this premarket?

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What is this after hours action?

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So premarket trading starts

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at 7:00 a.m. or 8:00 a.m. Eastern,

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and it's because people might want to buy or sell a stock

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based on overnight news or premarket news.

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A lot of the biggest news pieces

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come out after hours or premarket,

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because they don't want to issue news

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when the stock market is open.

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They want it before or after,

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so that you can kind of prepare.

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A lot of earnings news comes out

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before the market open or after hours.

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So for me, it's something to look at,

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but I don't really wanna trade that much pre- or post-hours.

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Why?

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Because there's not that many trades going on.

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The market is very illiquid,

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so you don't have a lot of movement,

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you don't have a lot of volume,

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and you might try to buy a stock

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based on what you think is good news.

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Let's say it's going up a little bit,

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but then when the regular market opens,

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all that premarket strength disappears in one minute

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when real trading begins.

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So the way that I look at premarket trading,

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I look at and see what's trading.

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Like, okay, is there news?

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Are people interested in trading this

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before the market opens at 9:30 a.m. Eastern?

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It's kind of a guide.

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Whether the stock trades 4,000 shares

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or 40,000 shares or 400,000 shares,

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it's just something in play.

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It makes me look at why is this company in play?

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Did they have news?

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Is that news something I'm interested in?

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But it's very difficult to trade these,

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'cause there's just not a lot of volume.

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Sometimes I will buy a stock premarket,

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when the news is so good,

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and I think by the time the stock market opens,

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people will see the news and the stock will spike more.

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You might see this

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if you're one of my subscribers to my newsletters.

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I call it kinda like an early bird gets the worm

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kind of strategy,

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where I might be up, depending on where I am in the world,

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but for whatever reason, I'm up earlier than most people

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at 7, 7:30, maybe 8:00 a.m. Eastern,

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and I see some big news and I recognize it as important,

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I'm gonna buy it right away just because I know

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that when other people see it,

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they'll probably bid the price up.

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That doesn't happen every day.

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News usually isn't that meaningful.

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Usually I can wait until the market opens,

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and I wanna see how the stock reacts first.

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Also, after hours, trading after 4:00 p.m. Eastern.

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I might look at the stock.

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I might look at earnings or news,

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but I don't wanna try to predict ahead of time.

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You can never predict earnings ahead of time.

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Wait for the news,

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and then wait for the reaction to the news.

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I know too many people,

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they see a company's earnings report,

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and they're like, oh my God, this is amazing.

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Let me just buy it.

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And then when the stock market opens the next day,

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it plummets.

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Wait for the reaction.

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The market will tell you what is good, what is bad,

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what is meaningful or not.

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It's dangerous to trade after hours.

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It's dangerous for you to try to judge the value of news.

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A lot of the time,

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the good news is already priced into these stocks.

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So there's this a thing called buy the rumor, sell the news.

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So the news might actually be amazing,

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but people might have already been expecting it

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for days or weeks.

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So when the news comes out, there's no buyers,

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and the stock plummets.

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And a lot of people say, well, there was good news.

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Why is the stock down?

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This makes no sense.

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Because it's already priced in.

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The stock market is not an exact science.

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There are some rules to this, and you have to learn them.

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So, long story short from me:

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Learn to recognize premarket winners

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and after hours winners.

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I'm always looking for big-percent gainers all day long.

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Big-percent losers and bad news, I stay away from entirely.

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Bad news changes the entire outlook on a company.

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I can't predict what's gonna happen.

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I really like just looking at big-percent gainers premarket,

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big-percent gainers after hours,

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and then judging based on the reaction the next day

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when the real volume comes in.

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