General question on Premarket. I've been trading part-time for about a year now so forgive me if this is a naive question, but here's what I don't get with premarket. I'll go to bed with a stock I want to trade the next day in mind, price targets, right. I wake up and the price target was reached while I was asleep. Then say futures are up, right, well I can't tell how much that optimism is already baked into the new price and how much there is still room for the stock to go up. Same problem in reverse if I'm short-biased, but the stock went down overnight. Seems often like if there was a big spike in premarket there's a quick profit-taking from about 9:30-9:40, then the stock will behave more normally, but apart from that, I just can't figure out how to cope with premarket shifts? Feel like if pre and post market didn't exist, my plan would always be clear to me. Any rules of thumb or general wisdoms would be much appreciated.
Just ignore premarket and post market. They don’t matter, unless you are trading at those times.it’s very illiquid and often premarket prices have nothing to do with reality from one really noob noob to another noob
I'd love to ignore it, and I realize the illiquidity makes the price action less meaningful and all. Problem is there is no reset button at the open, so it does affect those first 20 mins at least of correction, but I just can't figure out how to anticipate direction and levels with that.
Yeah but on a day like today, premarket makes me second guess shorting AMD at the ball, and it was a nice smooth ride down I missed out on. I guess all I'm really trying to get out of this thread is a little more confidence at the ball.
Take a look at - https://www.indexarb.com/ This is about "FairValue - Premium" - and what can happen at or near the Open. It can potentially be used at other times of the day - but we used it strictly for the Open. While I haven't used it for many years - mainly because I do not trade Equities anymore - and trade Futures based on my own Algos - it may or may not help provide an answer for you. The calculation is really not complicated - but you may get a headache - just reading about it on the website. Good luck - if you do get a headache - don't blame me. I used to devour this stuff - when I was younger - realized later - I really didn't need it. Also look at - https://www.cmegroup.com/trading/equity-index/fairvalue.html Another website: https://programtrading.com/index.html
You can't really plan for any of this, other than planning to look at charts and screeners, or whatever your routine is, so it doesn't matter what stock you chose the night before, each day will bring different best performing stocks. You have to be flexible and unattached to any particular thing, don't decide until you are ready buy.