Should I Buy Pre-Market or Directly After the Market Has Opened?

Read about pre-market prices vs open market prices, see if you should be buying stocks pre-market or after the market has opened.

By Simon Mugo
Edited by Taj Schlebusch

Published April 15, 2021.

Many people prefer to buy stocks after the market has opened to get the actual prices instead of pre-market prices. One of the main reasons why it might be better to buy after the market has opened is that many times, stocks tend to reverse their pre-market moves.

Experienced traders will tell you that many times a stock may trade higher or lower pre-market, posing a significant gap up or lower at the open, only to reverse course and head in the opposite direction. Traders who bought or sold at the open may be left with significant losses after the open.

The pre-market session is mostly dominated by big institutions such as the major investment banks and hedge funds that trade in dark pools and have different goals than retail traders. Some institutions might be buying or selling stock to hedge other positions and may not be particularly interested in the stock.

On the other hand, most retail traders buy stock to profit from gains in its share price and sell stock to profit from further declines in its share price. Therefore, it is always advisable to buy shares after the markets open as a retail trader.