As a researcher with experience in cryptocurrency markets, I find the concept of premarket trading intriguing. Allowing traders to buy or sell coins before their official listing on exchanges provides an opportunity to capitalize on market expectations before the general public. However, it’s essential to approach this trading strategy with caution and a solid understanding of its risks.
As a crypto investor, I’m always on the lookout for opportunities to get ahead of the curve. One such way is through premarket trading in the cryptocurrency world. This isn’t your typical exchange trading. Instead, it refers to the over-the-counter (OTC) market, where new tokens are traded before their official listing. It’s like being part of an exclusive club, giving you a first mover advantage.
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Before the official listing of tokens on an exchange, premarket trading allows buyers and sellers to set their preferred prices for buying or selling. The prices quoted during premarket trading may vary from the token’s market price once it gets listed.
In this type of trading, the exchange of goods or services occurs directly between two parties, much like the barter system. For instance, imagine someone in need of a rental car approached an office that had already closed for business. Fortuitously, another person arrived to return his own rented car and visited the office as well. Consequently, the first individual was able to borrow the second person’s car without going through the formal rental procedures.
Although pre-trading figures might signify investor anticipations, the post-listing value of a token is influenced by multiple elements and could deviate from the pre-market pricing. Ultimately, both prices are governed solely by market dynamics.
Why does the crypto community need premarket trading?
As a crypto investor, I can tell you that premarket trading refers to the ability to buy or sell digital coins prior to their official listing on exchanges. In this setting, traders place orders and quote prices, all of which are eventually settled using Tether (USDT) as the intermediary currency.
Traders have the flexibility to function as creators, placing orders with fixed price quotes, or as recipients, responding to existing active orders on the platform. To guarantee a transaction’s completion, both buyers and sellers must utilize assets as collateral. Following a successful and prompt payment, the deposit is restored. All transactions are processed using USDT as the settlement currency.
Premarket on traditional and cryptocurrency exchanges. Difference
In a conventional market setup, there’s an unofficial trading period called the pre-market. This transpires prior to the regular trading hours, typically initiating early in the morning, preceding the commencement of major stock exchanges like the New York Stock Exchange (NYSE) and NASDAQ.
In contrast to traditional markets that have defined pre-market hours, cryptocurrency markets are continuously active. Consequently, the term “cryptocurrency premarket” refers to trading platforms where investors can buy tokens prior to their official release or extensive circulation.
As a market analyst, I frequently observe traders engaging in the practice of employing the presale or pre-market phase to make speculative moves regarding cryptocurrencies. They base their decisions on their forecasts for the token’s value following its release and accordingly place orders accordingly.
Outside of normal trading hours, traders have the ability to analyze price fluctuations and identify possible trends and market trends that may emerge during the upcoming trading day.
Which exchanges offer premarket trading services?
In recent times, notable cryptocurrency platforms such as Binance, KuCoin, Bitget, among others, have initiated pre-trading services.
Users can secure precedence in accessing new investment prospects, enabling them to commence trading diverse tokens prior to their public debuts. Noteworthy projects that have garnered significant attention lately are NOT (Notcoin) and HMSTR (Hamster Kombat).
As an analyst, I’ve noticed an exciting development: Hamster Kombat, featuring adorable hamsters, is set to debut on KuCoin’s pre-market in just three days. If you haven’t begun farming yours yet, kindly refer to the pinned post for instructions on how to join this intriguing event. Let’s seize this opportunity together! #kucoin #hamster #hamsterkombat #HamsterFounder
— Hamster Combat (@hamsterfounder) June 21, 2024
Yet, it’s important to note that before the market opens, trading comes with considerable risks. Therefore, it’s crucial to scrutinize the market closely and remain adaptable to unexpected occurrences.
What traders say
In the crypto trading community, there’s a widespread belief that pre-market trading offers traders a valuable chance to place buy or sell orders for tokens prior to their listing. While opinions amongst traders surveyed in this field may vary, they all recognize the significance and utility of this feature within cryptocurrency markets.
A Binance user shared with crypto.news how the introduction of premarket trading on the exchange expanded his trading opportunities, despite carrying some risks.
“I can secure the most sought-after tokens before they go live on exchanges, which comes with added risk but also presents an opportunity for potentially higher returns compared to traditional spot trading. This is especially true when it comes to new listings.”
Binance trader
A user on KuCoin shares his experience of recently investing in the new HMSTR token but expresses uncertainty about the benefits of premarket trading for him. He also mentions that there’s usually a delay in transferring tokens during listings.
“I get it that carried-out instructions stay in effect, and exchange agents will update a new settlement period soon. Yet, the exact duration I’ll have to wait to obtain the tokens is uncertain. Keep in mind, no venture comes with a promise of listing on a certain platform, so traders inevitably take some risk.”
KuCoin trader
Should you try premarket trading?
When putting money into a specific asset, investors need to be mindful of the potential risks involved. Regardless of how attractive the opportunity might appear, there’s never a certainty of earning a profit or even protecting your initial investment.
As a market analyst, I would advise any potential trader considering pre-market trading to be fully informed of the inherent risks involved. These risks include, but are not limited to, reduced market liquidity, significant bid-ask spreads, and heightened price volatility.
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2024-06-24 20:14