How to Do Pre Market Trading on Robinhood

Are you looking to get a head start on your trades before the stock market officially opens? Robinhood, the commission-free investment platform, allows users to participate in pre-market trading sessions. In this article, we will walk you through the steps on how to do pre-market trading on Robinhood.

Understanding Pre-Market Trading

Pre-market trading refers to the buying and selling of stocks before the official trading session begins at 9:30 a.m. EST. This extended hour trading is available on Robinhood between 9:00 a.m. and 9:30 a.m. EST. It allows investors to react to news and events that occur outside of regular trading hours, potentially giving them an edge in the market.

Eligibility for Pre-Market Trading

In order to participate in pre-market trading on Robinhood, you will need to have a Robinhood Gold account. This premium subscription service comes with a monthly fee but provides access to additional features, including pre-market and after-hours trading. Make sure to upgrade to Robinhood Gold before attempting to place pre-market trades.

How to Place Pre-Market Trades on Robinhood

1. Enable Pre-Market Trading: Within the Robinhood app, navigate to your account settings and enable pre-market trading if you haven't already done so.

2. Select Your Stock: Search for the stock you want to trade and select it from the list of available options.

3. Choose Order Type: Decide whether you want to place a market order or limit order. Keep in mind that the liquidity in pre-market trading is lower, so use caution when executing trades.

4. Set Your Price: Enter the price at which you wish to buy or sell the stock. Be aware that prices can be more volatile during pre-market trading, so be prepared for sudden price movements.

5. Review and Confirm: Double-check all the details of your order before submitting it. Once you confirm the trade, your order will be queued for execution when the pre-market session begins.

6. Monitor Your Trade: Keep an eye on your trade during the pre-market session to see how it is performing. You can make adjustments or cancel your order if needed.

Risks of Pre-Market Trading

While pre-market trading can offer opportunities for profit, it also comes with increased risks. The lower liquidity and higher volatility during this period can lead to wider bid-ask spreads and unexpected price movements. It is essential to have a clear strategy in place and to closely monitor your trades to mitigate these risks.

Pre-market trading on Robinhood can be a valuable tool for active traders looking to capitalize on early market movements. By following the steps outlined in this article and being aware of the risks involved, you can take advantage of this extended trading session. Make sure to do your research and develop a sound trading plan before diving into pre-market trading on Robinhood.