Safirion
Anyone who opens the chart of a U.S. stock at the start of the trading session can sometimes be surprised: the price is already starting well above or well below the previous day's close. Part of that difference was built before the official open, in the pre-market.
What the pre-market is
Pre-market is the trading that takes place before the exchange's regular hours. In the United States, the regular NYSE and Nasdaq session runs from 9:30 a.m. to 4:00 p.m. New York time, but orders can be traded on electronic systems before that, starting at 4:00 a.m. After the close, there is an equivalent extended session, after-hours, which usually runs until 8:00 p.m.
In Brasilia time, the regular U.S. open falls around 10:30 a.m. or 11:30 a.m., depending on the time of year, because the United States uses daylight saving time and Brazil does not. It is worth checking the time zone difference on the day.
Why the price moves before the open
The world does not stop when the exchange closes. Between one session and the next, things happen that change the value of companies:
- Quarterly earnings reports, which many companies release before the open or after the close precisely to avoid interrupting the middle of the trading session;
- Economic data, such as employment and inflation, which in the U.S. are usually released at 8:30 a.m. New York time;
- Moves in Asia and Europe, which trade while the U.S. market is closed;
- Company news, such as acquisitions, lawsuits or changes in management.
The pre-market is the first place where this information turns into price.
Lower liquidity, wider spread
The most important point about the pre-market is that fewer people are trading. This has direct consequences:
- Wider spread: with fewer orders in the book, the difference between the bid and ask prices increases.
- Price jumps: a relatively small order can move the quote.
- Less representative price: a strong move on low volume can be undone minutes after the open, when real volume comes in.
| Aspect | Pre-market | Regular session |
|---|---|---|
| Participants | Few, many reacting to news | The entire market, including large funds |
| Liquidity | Low | High |
| Spread | Wider | Narrower |
| Price reliability | Lower: it can be reversed at the open | Higher |
The opening gap
When the opening price is far from the previous close, the chart shows an empty space between the two candles: this is the gap. A gap up appears when the news was good; a gap down, when it was bad.
There is a market saying that "every gap gets filled," meaning the price tends to return to the previous level. This happens often, but it is not a rule. Gaps caused by real changes in a company's value, such as earnings far above or far below expectations, may never be filled.
How to use the pre-market without trading blindly
- As a thermometer. The pre-market shows which asset is in the spotlight and which direction sentiment is moving.
- To mark levels. The pre-market high and low often serve as support and resistance references in the first few minutes of the session.
- Wait for the open to settle. The first 15 to 30 minutes of the regular session are the most hectic. Many traders prefer to let the price show its direction before entering.
- Smaller position, if you trade early. With a wider spread and more unstable pricing, risk per trade rises even with the same lot size.
How it works at Safirion
Among Safirion's more than 130 assets are stocks and indices, which react directly to what happens before the open. Before trading, check each asset's trading hours on the platform itself, because they vary depending on the market of origin. Safirion's fixed spread helps keep costs predictable precisely during the most volatile periods.
Open an account with SafirionDeposit from US$ 10, sign up in just a few minutes →Risk warning: Trading leveraged products involves a significant risk of loss and may not be suitable for all investors. Past performance is no guarantee of future results. Trade only with capital you can afford to lose.
