Glossary

Pre-market trading is the buying and selling of securities before the regular market session begins.

Pre-market trading allows investors to act on news or events that occurred after the previous trading day's close, potentially giving them an advantage. However, pre-market trading often has limited liquidity and wider bid-ask spreads, which can result in higher trading costs. ⏰

For example, if a company releases strong earnings results before the market opens, an investor might purchase shares during the pre-market session in anticipation of a price increase once the regular session begins.

Fun fact: Pre-market trading is often seen as an indicator of the market's direction for the day. If a significant event occurs overnight, the pre-market session may show how the market will react when it opens. However, this indicator is not always accurate, as market sentiment can change throughout the day. 🌅📊