Newbie Here - After Hours Market Pricing

D

Doglover

Hi, I admit this is a newbie question. Although I've owned long term investments/mutual funds for years, I'm a bit new to day trading.

My question is, say for example positive news comes out about a company early in the morning (for example 8:00am EST). The pre-market price from 6am - 8am EST is steady at $10.00, then starts to move up at 8:30 AM EST. Then when the market opens at 9:30am EST it instantly jumps way up to $15.00 a share. My question is, if I made the purchase at 8am or even 7am, would you expect the $10.00 buy price or would you receive the same 9:30 AM price as everyone that bought the stock at 9:30am?

Sorry, I understand this is a newbie question, just trying to wrap my head about after marketing pricing versus opening pricing. I've heard different stories, so need a third opinion.
 
I think the answer depends on your broker and how you are placing the trade. If you are daytrading, hopefully you are using software that shows what price the stock is offered at. If you buy pre-market at $10, it should show that as your execution and as the stock starts to move up you should see your open PnL increase.

I would never call a broker, say "buy," and not know what price I was getting.

Lastly I have to say after hours is a whole different game. A stock can move many multiples of what it did all day in a split second when earnings are released after hours.
 
Of course Ferdinand is right. Get a DMA (Direct Market Access) account and you won't have any doubts as to the price you're getting as you'll know exactly which ECN you're transacting on.

I used to avoid pre and after market because of the low liquidity. I eventually figured out that since I'm a small fry, the low liquidity is not a real problem. So when I see really attractive prices (in the premarket especially) I take them. I've seen stocks move in the opposite direction of where logic would suggest they move, based on the news. Taking these trades has worked out well so far, but I don't have enough data to show that it's truly an edge.

But it's clear that the big players can't deal with the low liquidity of these markets. And the same seems to apply to the HFT houses.
 
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