Pre-market movers might sound like the name of a moving company, but it’s not. The term refers to stocks and their movements before the market opens.
While the concept of pre-market movers can seem abstract to new traders, it’s well worth exploring.
This post offers a brief education on what pre-market movers are, and how you can use them as a potential method of giving yourself an edge in your day-trading career.
Table of Contents
- 1 What are pre-market movers?
- 2 Why should you look at pre-market movers?
- 3 Additional benefits of pre-market movers
- 4 Characteristics of pre-market movers
- 5 How to scan for pre-market movers
- 6 Additional factors to examine
- 7 One Platform. One System. Every Tool
What are pre-market movers?
Pre-market movers are the stocks that are moving after the market closes for the day and before it opens the next morning.
Sometimes, the movements are more focused in the early-morning hours before the market opens. For instance, the NASDAQ premarket session runs from 4:15–9:29 a.m. Eastern time in the USA. These are the hours directly before the stock market opens at 9:30 a.m. Eastern.
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Why should you look at pre-market movers?
Looking at what’s happening before the market opens can sometimes provide you with many trading opportunities.
For one, you have the “early bird gets the worm” advantage. Zeroing in on stocks making pre-market gains gets your finger on the pulse of what’s going on in the market. By scanning and focusing on these movers in the early hours, you have a chance to do research and look for catalysts before other traders have tuned in.
By taking the time to focus on pre-market movers, you can have a detailed trading plan ready early in the day. This means that by the time the market opens, you can have a distinct advantage because you’ve already mapped out some potential trades.
Simply put, you already know where the action is for the day, so when the market opens, you’re ready to hit the ground running.
Additional benefits of pre-market movers
As you’ve probably already gathered, evaluating pre-market movers can help you see what stocks are moving in the market before the trading day begins.
However, these pre-market movers aren’t just beneficial for one-off stock picks — they can also give you a good indication about what’s happening in the market at large. For example, they can clue you in on catalysts, company news, mergers, and world events that might affect not only specific stocks but entire industries.
Moreover, pre-market activity can give you an indication to the general tone and rate at which the stock market is moving.
While pre-market movement can give you an inkling about which specific stocks to trade, in the bigger picture, it can also give you invaluable information about particular sectors, industries, and the economy.
Characteristics of pre-market movers
When looking at pre-market movement, what should you look for? A few important hallmarks of pre-market movers might include (but aren’t limited to):
- Stocks with higher price gaps from the prior day’s market close
- Stocks with significant price drops
- The most actively traded stocks (in terms of trading volume)
How to scan for pre-market movers
StocksToTrade gives you the opportunity to create pre-market scans.
To get started, you may choose to identify pre-market movers, then filter the information by volume to determine where to focus your attentions. The simple fact that a stock has moved doesn’t mean you should trade.
However, identifying the movement can be the first step in helping you do your due diligence and determining if a stock is worth your time and effort to trade when the market opens.
Other things to look at include stock price, the historical action of the chart, and resistance levels. Looking at pre-market movers from many angles can help you with formulating a trading plan.
Additional factors to examine
Once you’ve made an assessment of pre-market movers, here are some other things you can look for to help figure out if a trade is worthwhile:
What’s going on with the company in question? Company news can be extremely informative when deciding whether to make a trade.
For example, has there been news (or even a rumor of) regarding a merger or sale? This type of activity could potentially have an effect on the stock of both the companies buying and/or selling. Something like an acquisition could mean that a stock price might ascend rapidly.
If an earnings report or talk of a company’s earnings report is positive, there could be an uptick in stock price. This mean that as a trader, you can potentially benefit from buying in and enjoying the ascent as the stock gains more momentum. At the least, it’s worth looking into.
Analyst estimates and recommendations within the industry or the market can also help in terms of considering earnings reports. However, never just take someone else’s word for it — always back it up by doing your own research, too.
Charts are often helpful in backing up pre-market movers research.
Stock charts can help traders monitor how a given stock is being traded; this can help identify patterns over time, such as The Dead Cat Bounce.
Referencing the stock’s movement history and comparing this with its pre-market movement can help you analyze how promising a stock’s volume and movement really is.
Learning the hows, whys, and whats about pre-market movers can be an invaluable resource to traders.
Including research and evaluation of pre-market movers in your routine can give you an edge in the market, and might give your stock market picks additional weight.
Do you research pre-market movers? Why or why not? Let us know in the comments below!