Hello all. so a few of you may have read my other posts and know that i am fairly new investor so i am not a expert about the stock market what so ever. So when i signed up for the Robin-hood app i read all the agreements about how there is no pre/after hour trading i figured OK i guess that's one of the trade-offs of having a $0 dollar trading fee so i wasn't that concerned. Over the past few weeks my stocks have been doing well and pre/after market trading has not majorly effected my stocks at all.. basically minimal gains and minimal losses. I know how stop losses/limits and all that work but since robin hood doesn't allow after or pre hour trading i cant do anything until the market opens !!!!! today i realized how much i hate this app now and im opening up a TD Ameritrade account ASAP. I woke up today at 7:30 checked my portfolio around 8:10 to find out that it had plummeted 9% in literally 10min and 2 of my stocks had dropped 30% before the market even opened and all i could do was sit and watch. How often does this happen or am i unlucky?
Before 9:30 ET and after 4:00 ET, all the major exchanges are closed.... So after hours, any shares traded come from smaller exchanges.. Or are traded between individual parties........ This means there is little to no liquidity (volume), so even if you could have placed an order, the chances of getting filled are far less Robinhood does offer after hours trading, but only in their Gold package, which you do NOT want, because it will put you in a margin account.... And the only thing worse than losing your money, is losing someone else's I don't think many brokers offer after hours trading.. Pretty sure TDA doesn't (my account doesn't)...... So what you experienced is just part of the game, and I've experienced it too.. Pretty damn frustrating!!! But there are ways to lower your risk... For one, look for less volatile stocks.... As a general rule, the lower the share price, the more volatile the stock can be..... For one, they require less capital for the big dogs to manipulate (see penny stocks) And two, NASDAQ and NYSE have certain standards for listed companies, and one of them is a minimum share price... I believe it's $1.00 for both, so the closer a stock is to $1.00, the closer it is to being de-listed.. Which means they're in trouble! Another way is to look at charts somewhere else... Robinhoods line charts tell you next to nothing about price action, and don't even display volume at all.... It literally is like trading blind.... I always watched charts on my TDA app, but there are several websites with free charts as well... stockcharts and trading view are a couple The last way, which hopefully you do already, is pay attention to news.... Maybe your stock just reported a negative earnings surprise, or maybe the company was sued... Any number of things can make a stock drop over night..... There are a number of good apps that you can put you're watchlist on, and they will send you notifications with any news or info pertaining to your stocks...... Ive had Seeking Alpha for a while and I like it.. Also just got the CNBC app, and that one is great too Btw... Luck has about as much to do with this game as it does with fishing.... You can randomly toss a hook in the water, if you're lucky, you'll get bit.... Or you can pay close attention to the weather conditions and seasonal patterns, and cover a lot of water to eliminate unproductive areas... Then, when you finally land that 10 pounder, you'll understand it was more than luck!
That will happen regularly, especially when a big news event happens, or an earnings report. Honestly, pre/after market is a crapshoot a lot of the time, especially to a new investor. It moves so quick when that news happens, that by the time you found out anyways, the big move has already happened. If you're nervous about big jumps after hours and pre-market, you're going to have to avoid investing, because earnings reports happen every 3 months, companies have news that happens randomly, etc. It's part of the game.
This is what I was going to say. I'm not sure you need to trade pre/after market as a beginner. These earnings reports are planned events, so one thing you can do to protect yourself is close your position before the earnings report (very easy to do with $0 comissions from Robin Hood) -- of course you forgo any profits that may happen too. And if you do hold through the earnings report, even with pre/after market trading that may not save you. Example SNAP lost 20% immediately when report was released. Granted, you could have immediately sold because it eventually went -25% last night. But today it's -21.4%, so up from the low point of last night. You see it can be a crapshoot. And then there's the example of Pandora which started down (I'm trying to recall maybe -3%) immediately after report, ended up the night (maybe +3%) because of something like a conference call which companies do after giving the hard numbers, where they explained that they were going for a sale (which investors like), but the next day went as low as -7%. Other companies that do swings like this are Facebook and Amazon, they'll swing between -5% and +5% after hours on their reports, tricking people who do try to trade after hours, and people trying to frontrun a "big move" they expect after what they think is a "beat" or "miss". Even with a stop loss in after market, it can be gapped over. And after market trading will be no help. Sometimes easier on your nerves to just close before the report.
I will sometimes buy panic shares PM AH if it's on my list, have sold a few in those markets. Some of my plays after the news hits I can get a idea of how the market will react by looking at volume. To me it's like watching futures for the most part.
Any good broker worth a flip offers after hours trading. For me margin is the only way to go, without it you can't short and are limited to trading settled funds unless you hold a day or two. Not bragging but with margin I can buy well over 100k, seldom do but it's a option. I'm level 3 in options so have a lot of angles at my disposal. Just sayin.
Why can't you short without using margin?? I mean, obviously you're borrowing the shares, but if you have enough cash in your account to cover your position, then you're not trading on margin.... Right??
Regulation T. One of the rules on the books... On the margin topic, if you have a cash account you can only DAY trade with settled cash, whereas if you have a margin account you can do 3 daytrades in a rolling 5 day period. This is for accounts under 25k.. Margin is much better and you don't have to use it, it's just another tool in the box.
Ah.. I see.. So technically, you're borrowing your own money instead of waiting 3 days for it to settle But I thought that "3 day trades" rule was only a Robinhood thing... So other brokers do this too?
@Jrich The day trading rules apply to everyone, not just Robinhood http://www.finra.org/investors/day-trading-margin-requirements-know-rules
Thanks for the reply's. you guys were exactly right i bought it at like $1.15 and it bumped up to like $1.45 which is a really good move. On Tuesday they had a earnings report that i was unaware of and apparently they missed revenues for the year pretty significantly that's what caused it to tank the following morning premarket. Now i have to keep a close on eye on my stocks knowing that the slightest variable can dramatically change the stock. Thanks alot !! and your right RobinHood chart sucks so much !!! i downloaded a app that is a alot better its helping.
Well I'll be damned! Sure does... Learn something new every day! I figured that was just Robinhoods way of keeping people from abusing their free trading... But it's not Kinda seemed backwards at first... Like, to lower risks, the SEC wants you to risk MORE money....... But I think I get it Anyone with only a few hundred dollars could bet it all, plus margin, then just walk away if they lose...... But anyone with $25,000 in an account is not likely to risk it all... And if they do lose a significant amount, the rest is there to ensure the broker doesn't get screwed.... Like collateral
