If you're new to US shares, continue reading for an understanding of how pre-market trading works, as well as some of the potential benefits and risks involved.

What is pre-market trading? 

Unlike the ASX, where retail investors may only submit or amend orders during pre-market hours, the US share market features a pre-market (and post-market) trading session. 

This session provides investors the opportunity to buy and sell stocks before the US share market opens for regular trading at 9:30am EST.

Pre-market trading may begin as early as 4am EST, although access to this session varies from one broker to the next and many brokers don't provides access at all. Where pre-market trading for US stocks is available, trading hours are typically between 7am and 9:30am EST. 

During pre-market trading prices are often volatile and there is greater risk to investors. This is because there are typically fewer investors participating in the session, which means lower trading volume(s), larger spreads, and potentially more difficulty executing trades than during the regular trading session. 

It is not uncommon for some stocks to see large fluctuations in a short period of time. Furthermore, while the regular trading session may see a stock enter a temporary halt on a significant price fluctuation, called a circuit breaker, this does not apply in pre-market trading. Because of these risks, investors are generally required to opt-in to pre-market trading in the US each session.

What are some of the benefits of pre-market trading?

There are a number of potential benefits when it comes to pre-market trading for US stocks. With this in mind, we are delighted to give Selfwealth members greater flexibility in making investment decisions. Some of the potential benefits include:

• Trade sensitive news: Big moves in stock prices often unfold in the pre-market trading session following company announcements, earnings reports, news events, and the release of economic data. Pre-market trading allows you to make investment decisions when news and data first becomes available.

• Access live trading at a more convenient time: As the regular trading hours for US shares fall late into the night for Australian investors, pre-market trading provides an alternative for investors to participate in live trading sessions, instead of relying on orders placed overnight

• Gauge sentiment towards stock: Pre-market trading may be used to get an indication as to where a stock might open at the beginning of the regular trading session

• Analyse price action: In some instances, the price range during pre-market trading has the potential to form support and resistance levels during the regular trading session

How do I access pre-market trading?

Accessing pre-market trading for US stocks is simple. From the order' page, there will be pre-market options for in the 'Trading Session' dropdown.

You may submit an order live during Selfwealth pre-market hours between 7am EST (11pm AEDT) and 9:30am EST. The order will only be active for that session. Alternatively, after the close of a regular trading session at 4pm EST (8am AEDT), Selfwealth will accept orders for the next pre-market trading session. In this case, orders will remain pending' until the next pre-market session opens. If your order does not fill in the pre-market session, it will roll over into the regular US trading session and will be treated as a normal limit order.

For example, an order placed at 5pm EST (9am AEDT) will remain pending until the following day in the US when it is processed at 7am EST. If it hasn't filled by 9:30am EST, it will roll over.

It's worth noting that US pre-market trading will only support stop-limit orders, not stop loss. (A stop-limit order is a conditional order to sell a security once the price of a stock reaches a specified price. This price is called the Trigger Price.)

For more information, head to our section on US share trading.

If you have any questions, please visit help.selfwealth.com.au for a quick answer.

If you want to talk to us directly, you can get us on live chat during trading hours or email us at support@selfwealth.com.au.