stocks

How to Buy Stocks Premarket

Stock Market Guides is not a financial advisor. Our content is strictly educational and should not be considered financial advice.

Have you ever been itching to buy a stock but the stock market isn't open yet? We know the feeling.

If you want to set up orders to buy stocks during premarket hours before the stock market opens, this article will show you how to do it.

 

What Is a Premarket Trade?

A premarket trade refers to a stock trade that takes place before the regular trading hours of the stock market. It occurs outside of the typical market open hours and involves buying or selling stocks during this early time window.

Premarket trades are different from trades during normal market hours because:

1. Only certain order types are allowed during premarket trading.

2. The market characteristics are different during premarket hours. For example, there is typically noticeably less volume and therefore less liquidity during premarket hours.

 

What Are Premarket Hours

Normal market hours for the U.S. stock market are from 9:30 a.m. to 4:00 p.m. Eastern Standard Time, Monday through Friday (excluding holidays).

Premarket hours for the U.S. stock market are from 4:00 a.m. to 9:30 a.m. Eastern Standard Time, Monday through Friday (excluding holidays).

 

What Types of Trades Can Be Placed During Premarket Hours?

During premarket hours, it's not possible to use market orders. This means that investors can only use limit orders.

If you want to buy a stock during premarket hours, the only way you can do it is with a limit order where you specify a limit price (the highest price you're willing to pay to buy the stock).

 

What TIF Setting is Required During Premarket Hours?

When you place an order to buy a stock, you typically have to designate a TIF setting. TIF stands for Time In Force.

By default, the TIF setting for many trading platforms is set to Day, which means the order will only stay active for the current trading day, during normal stock market hours.

If you want to buy a stock where the transaction itself occurs during premarket hours, then you need to change the TIF setting to EXT, which stands for Extended Hours.

If you want to place an order during premarket hours to buy a stock, but you want to the transaction itself to occur during normal market hours, then you can set the TIF setting to Day or GTC (Good 'Til Canceled). Both those TIF settings are ones that only allow the order to be filled during normal stock market hours.

 

How to Buy Stocks During Premarket Hours

To place an order during premarket hours, just follow these steps:

The exact steps and options might vary depending on the trading platform you are using, but the basic process should be similar across most platforms. Always refer to your platform's instructions and guidelines for definitive information about premarket trading in that platform.

You can see an example of how to buy stocks premarket with TD Ameritrade's Thinkorswim platform by watching this video:

 

 

How to Place Orders to Buy Stocks During Normal Market Hours Before the Market Opens

You can place a trade during premarket hours that is intended to be executed only during normal market hours.

This can be achieved by setting a TIF value of Day or GTC. These are typically used for trading during normal market hours, and they indicate that the order should be executed when the market opens and remains open during the regular trading session.

For example, if you want to set up an order to buy a stock at the opening bell using a market order, you can set that up during premarket hours by using a TIF value of Day on the order. Even though you are placing the order before the market opens, the order won't be active until the opening bell.

 

Why Buy Stocks Premarket?

A key reason to buy stocks premarket for many people is that they don't have availability during the day to make trades.

For example, if someone has a job during normal market hours, they may not be available to make trades during that time.

Another reason to buy premarket is that you might get trade ideas before the market opens and want to act on them immediately.

For example, here at Stock Market Guides, we offer a stock picking service that sends out stock picks before the market opens. For people who want to act on those picks, it can make sense to set up an order when seeing the stock pick rather than waiting for the market to open.

 

Learning More About Buying Stocks Premarket

If you need more help getting up to speed on buying stocks in general, take a look at our guide on how to buy stocks for beginners.

You can contact us any time if you would like to ask any questions about premarket stock trades are about trading in general.