Find out how. Let's Talk

How the Market Works

Momentum Indicators (Pre- and After-Market trading)

Posted by kdadmin on December 7th, 2012.

While the economic indicators are relatively stable, the market’s obsession with the fiscal cliff has made it erratic and volatile. This can be particularly unnerving if you’re tracking the performance of an individual stock. Instead of obsessing on recent market news, there’s a more useful way to anticipate the potential trends of your stock.

If you track individual stocks that trade on NASDAQ, for example, go to the NASDAQ website, and enter your security symbol. When the site displays the quote. Then, look for a link to pre-market or after-hours trading.

The pre-market and after-hours trading info can provide useful insights to the movement trends both after and before the formal market hours. While it is possible to trade in the pre-market and after hours trading times, liquidity is limited so volatility can be accentuated. Use of limit orders is paramount. Personally, I think it’s usually better to use this information as an indication of sentiment, volume, or price trends and be prepared to place trades first thing in the morning.

This being said, it’s imperative that you have a deep fundamental understanding of the stock that you wish to trade. (No trades based only on technical indicators. You’re smarter than that.) Luckily, you have the full research capacity of our firm to help you.

Of course, you can still have a day like Apple had on Wednesday, where the stock dropped nearly 6% due, most likely, simply to a change in the margin requirements by one of the exchanges. So, before you decide to make a purchase, be sure to call me. Tell me the symbol of the stock, and I’ll send you all the fundamental and technical research we have to help you make an informed decision.

Meet

Minneapolis, MN | St. Croix, USVI
(763) 577-1900