What Is Pre-market Trading in Cryptocurrency?
In the traditional markets such as forex and stocks, there is something called pre-market trading, and it refers to the buying and selling of stocks before the official opening of the regular trading session. The regular hours for stock trading in the U.S. span from 9:30 a.m. to 4:00 p.m. Eastern Time. However, pre-market trading allows traders to execute orders before the market officially opens, offering a glimpse into early market sentiment.
Unlike traditional markets, cryptocurrencies provide an around-the-clock trading environment, including pre-market periods. Crypto markets don’t have a designated “pre-market” since they remain open 24/7, even during holidays such as New Year’s, presenting investors with continuous trading opportunities.
Price Movements and Influencing Factors
During Western holidays like Christmas and New Year, more people tend to trade cryptocurrencies like Bitcoin and Ethereum. These digital currencies often see changes in trading activity and prices during these holidays. Bitcoin, in particular, is a good example of this. If we look at its past price changes on a calendar with major global holidays, we usually see more activity around those dates. These price changes are not random; they often last for a while, either going up (rally) or down (correction). Because of this, traders and analysts pay close attention to these holiday periods in the cryptocurrency market.
Here are some influencing factors to price movements:
- Increased Trading activity: During the holiday season, individuals experience a departure from their typical routines. Regular traders, usually preoccupied with daily commitments, find themselves with more available time. This surplus of free time often translates into heightened involvement in the financial markets. For many, the holidays present a unique opportunity to dedicate focused attention to their investment portfolios, resulting in increased buying or selling activities.
- Emotional Trading: The celebratory atmosphere during holidays can significantly sway trader sentiment. Optimism associated with festive periods often leads to bullish behaviors in the market. Conversely, uncertainties accompanying the new year may prompt more conservative or bearish trends among traders.
- Macroeconomic Impacts: Holidays, particularly significant ones like Christmas, coincide with intensified economic activities. Increased consumer spending contributes to a surge in cash flows within the market. This festive spending spree, combined with the overall positive holiday sentiment, holds the potential to influence broader financial trends. In the realm of cryptocurrencies, this may manifest as a rise in investments, with individuals allocating a portion of their holiday bonuses or savings into digital assets.
Risks and Opportunities
Just as trading during the work hours, trading in crypto during holidays comes with added risks due to the limited technical support from exchanges. As such, it is important to have a proper risk management strategy in place. Here are some tips to minimize risks when trading crypto during the holidays.
- Set rules: you should always have a trading plan and rules to follow for a particular trading period. Sticking to your trading rules will prevent you from making poor decisions that are based on emotions and focus more on facts and proven strategy. When you adhere to your plans, you eliminate unnecessary and disruptive emotional and other psychological influences.
- Setting Stop-Loss Orders: Consider setting appropriate stop-loss orders to manage potential losses. The ups and downs in the market are always changing. So, how much prices go up or down on any given day keeps changing too. When the market is very unpredictable, it’s a good idea to make your safety nets (stop-loss and take-profit orders) wider. This helps avoid stopping your trades too soon and lets you make the most profit when prices change a lot. On the flip side, when the market is more stable, it’s smarter to place your safety nets closer to where you bought in, and not get overly hopeful.
- Diversify your portfolio: Portfolio diversification is a strategic approach designed to mitigate the risks associated with investing or trading by distributing your capital across various asset classes. The rationale behind diversification lies in diminishing the influence of any individual investment or trade on your overall portfolio. While it doesn’t ensure guaranteed profits, portfolio diversification serves as an effective means to diminish the overall risk inherent in your investment portfolio or trading strategy.
Tools and Platforms
To participate in cryptocurrency trading, traders need to have an account on a platform that supports the crypto they wish to buy. Selecting the right trading platform is important for effective participation in the crypto market. LBank is a reliable platform that offers spot trading for major cryptocurrencies and over 350 coins with minimal fees, currently. Additionally, LBank provides advanced futures trading with leverage up to 125x, supporting assets like Bitcoin and Ethereum. The platform’s futures trading is designed for convenience, allowing users to use one coin as margin for trading other contract pairs.
To begin trading on LBank, ensure your account is funded and navigate to the trading section. Choose from tabs like Trade (Futures and Spot), Copy, or Bots based on your preferences and experience. Select a product from LBank’s diverse range of cryptocurrencies and trading pairs to align with your trading goals, allowing you to diversify your portfolio.
Final remarks
In traditional finance, there’s a specific time for early trades before the market officially opens. Cryptocurrency markets, on the other hand, are open 24/7, providing continuous trading chances. But, this non-stop availability also comes with its own set of challenges. It’s important to understand these differences and use the right tools and strategies to trade cryptocurrencies successfully.
Disclaimer: The opinions expressed in this blog are solely those of the writer and not of this platform.
