What is pre-market trading?

Many investors and traders watch the pre-market trading activity to judge the strength and direction of the market in anticipation of the regular trading session. Pre-market trading can only be executed with limited orders through an "electronic market" like an alternative trading system (ATS) or electronic communication network (ECN).

Can a stock be traded in a pre-market session?

Generally, only listed stocks can be traded in the pre-market session. Not all stocks, though. Stocks such as those that have a limited float or are not widely held, or small-cap stocks, may not have sufficient volumes to make pre-market trading a viable proposition. Options cannot be traded in the pre-market session.

What time can a market maker execute a pre-market order?

Market makers are not permitted to execute orders until the 9:30 a.m. EST opening bell. Pre-market trading activity generally has limited volume and liquidity; therefore, large bid-ask spreads are common. Many retail brokers offer pre-market trading but may limit the types of orders that can be made during the pre-market period.