How Do Stock Prices Move?
One of the biggest reasons for traders not getting any pre-markets education is that they are completely misinformed on what the pre-marks really are. Many new traders simply see the term ‘pre-market’ and immediately discount it as a meaningless buzzword. They believe that there is some great benefit to going out and getting pre-marks, that somehow you will be able to predict where the market will go before it happens, in the hope that if you get one you will then get a load of it at the market’s front. The truth is that pre-marks are nothing more than price-weighted stock-ips, and while these have obvious benefits in that they allow you to trade ahead of the curve without needing to spend money on market-based research, they are not in fact a’mark’ in any way.
In order for you to trade pre-marks you need to understand the markets. This is not as simple as reading the numbers on your charts. To do this, you need to study the psychology of the market – or learn to read other people’s charts. Many traders make the fatal mistake of believing that price-weighted stock-ips on a particular chart are ‘true’ pre-marks – and all that they need to do is follow the indicator that has been placed on the indicator (usually the one with the most recent price activity on the chart). However, there is more to pre-marks than meets the eye, and if a trader wants to get a true understanding of where the market is going he needs to understand the psychological basis for its movement.
By understanding the psychology of the market you will be able to tell when a stock-ip is over priced, or over bought, and therefore determine whether to enter or leave the market. Pre-marks can give the trader an advantage in the sense that they can act on them earlier, before other people have had a chance to mark them. However, there is no guarantee that the trader who gets the pre-mark will make money in the short run.