Premarket trading refers to trading that takes place on exchanges prior to regular market trading hours. Premarket stock trading occurs between 8:00 AM and 9:00 AM. Premarket trading volumes are typically lower than regular trading hours. Because there are very few participants before the market hours (i.e. It is difficult for investors to complete transactions after 9:30 AM.
Investors have less liquidity in premarket sessions. Converting stocks into cash may slow down the price adjustment.
Pre-market trades can be executed using computer-based systems, including alternative trading systems or electronic communications networks. For a variety of reasons, traders use premarket trading for:
Pre-open market sessions take place from 9:00 AM to 9 :15 AM at both the Bombay Stock Exchange and National Stock Exchange (NSE). Pre-open market refers to the trading activity that takes place before the regular stock exchange session.
Electronic communication network (ECNs) allows for extended session trading. Through Electronic Communication Networks (ECNs). ECNs keep track of buy orders at predetermined rates and when there is a matching sell order, it acts as a matchmaker, bringing them closer to one another. Premarket trading sessions are very volatile because of the tight liquidity levels.
Let's first learn some basic terms, e.g. Various Type of orders placed on the market
The session lasts 15 minutes and consists of three slots.