Should I care about the Pre-Market?

The answer is yes, but not always. However, the Pre-Market, in general, should not affect or modify your investment decisions in most cases.

Over the years, I have seen many Pre-Market days in full red.

I am going to tell you a true story that I lived (and several times!):

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Everything indicated a great bearish day in the entire market, the red Pre Market showed it.

In fact, it is fulfilled and the first minutes of the market is catastrophic. Big hands don't stop selling. I see how the value of my shares in a matter of minutes goes down and down. At a certain moment, everything seems to have found a floor, and the great investor decides to start Buying. Slowly, the red of the market begins to turn to a breakeven-flavored gray and the hours after the big bleed turn green.

In the midst of that fearful situation, I let myself go and also sold my shares at a loss.

The market is close to closing and I already see the Green color in most of the actions. The closing bell rings and we see a beautiful green color in Indices and Stocks.

I, feeling sorry for having sold in the midst of the carnage.

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You feel identified? Have you experienced a similar situation? Or not yet?

My experience in the Markets is that. Don't be swayed by what the Pre Marker shows. Large institutions play with this emotional factor and you must avoid falling into that game.

When is the Pre Market reliable?

Well, there are days where a stock shows a % increase or decrease in its price considerably. Let's say that a stock that presents a Pre Market of +2.5% onwards is already an indicator that the day will be positive no matter what. This happens many times when a company has positive Earnings (or negative too! and they lead to an upward movement, contradictory? Not in the markets.).

Therefore, the best advice I can give you is; keep your plan in the medium or long term. Do not be influenced by the noise of day to day.

When to sell?

Being faithful to the name of this Blog, you should not hold for life and more if your shares devalues at dramatic levels. You should always evaluate a Sell or place a Stop Loss for all your investments. In most cases, your Stop Loss zone should be in place if the price breaks a technical analysis factor. We will see more about this in future posts.

If you have doubts about your investments, do not hesitate to leave your comment!