INFOGRAPHIC: All about pre-market trading

In today’s environment, traders must be willing to watch the markets around the clock. The combination of globalization and new communication technologies mean that markets can be affected by any event in the world at any time.

Therefore, it is important for most active investors to know how pre-market trading works. Using ECNs (Electronic Communications Networks), investors are able to match buy and sell orders in extended hours trading without a middleman.

The ability to trade outside of market hours opens up a realm of possibilities. It allows investors to take advantage of opportunities if they can react fast, and it also allows more defensive postures if the situation calls for it.

Many major news events worldwide do not happen during the North American business day, and can have a big impact on markets: events or disasters such as the Fukushima tsunami, Crimea, ongoing happenings in the Middle East, and the Cyprus banking crisis have all developed while North American investors were sleeping. ‘

By: Jeff Desjardins

Original graphic from: Timothy Sykes