1. The document discusses pre-market trading, including what it is, its advantages and disadvantages, how it is executed, and strategies for pre-market trading. 2. Pre-market trading refers to stock trading that occurs before the regular market session opens, allowing brokers to trade in less crowded conditions. 3. Advantages include reacting immediately to news and getting market insights, while disadvantages include higher risks, fees, and wider spreads due to lower volume than regular trading hours.

1. Trading:
How to attain maximum
advantage while
trading?
Presented By: Jasmine Kaur
Software Consultant
Knoldus Software PTE. LTD.(Singapore)

2. About Knoldus
Knoldus is a technology consulting firm with focus on modernizing the digital systems
at the pace your business demands.
DevOps
Functional. Reactive. Cloud Native

3. Our Agenda
1. What is Trading?
2. What is Pre-Market Trading?
a. Advantages
b. Disadvantages
c. How is it executed?
d. Trading Strategies
3. What are Pre-trade Messages
a. Uses of Pre-trade Messages
b. Steps of Pre-trade allocation
c. Quotation & Negotiation

4. What is Trading?
Trade is defined as the general marketplace of buying and selling goods, the
way you make a living or the act of exchanging or buying and selling
something.

5. Examples of Trading
1. When you give your friend your chicken burger in exchange for his tuna
burger.
2. When you give a greeting to your friend and get greeted in return.
3. When you buy shares of a company stock.

6. What is Pre-market Trading
Pre-market trading refers to activity in the stock market that happens before the regular
market session opens. During the regular hours, many brokers find the stock market
extremely crowded and hence, they prefer a less packed time to trade i.e. either during
pre-market or post market.
Pre-market Trading Hours:
Although the pre-market trading hours happens between 4:00 a.m. and 9:30 a.m EST, it
usually varies from broker to broker. A broker may settle to offer pre-market trading
hours from 4:30 a.m. EST to 9:30 a.m. EST, while another may offer it from 7:00 a.m.
EST to 9:30 a.m. EST.

7. Advantages of Pre-market
Trading
1. If you don’t want to buy stocks during pre-market hours, it is still beneficial since it
will give you an advance information and insight about the stocks once the market
opens. Thus, you can analyze and judge the direction and strength of the market
during regular trading hours.
2. It also provides you the power to immediately react to news items, such as earnings
reports. Once the market opens, there might be potential massive movements and
thus you will be too late to place a trade to ride the earnings reaction.

8. Disadvantages of Pre-market
Trading
1. In comparison with the regular trading hours, the fees and rules associated with
pre-market trading can be different. This factor usually varies from broker to broker.
2. The volume of stock exchanges is quite less during the pre-market trading hours.
Thus, making it difficult for the traders and brokers to execute some of the orders.
3. This usually has higher risks as compared to the regular trading hours. It is because
of the fewer trading activities, market movements and volumes during these hours.
Following are the side effects associated:
a. The fluctuation in the prices in the market is higher than the regular trading
hours.
b. The spreads between the bid and ask price is wider.

9. How is it executed?
This type of trading is executed with limited orders using ECNs i.e. Electronic
Communication Networks. It is a computerized system that automatically
matched the buy and sell orders, thus eliminating the need of a middleman. It
will connect the brokers to the individual traders directly for trading purpose.
This helps in making the process fast and convenient.

10. Pre-market Trading Strategies
1. Earnings Release
2. Economic Indicators
3. Headline News
4. E-mini Future Cues
5. Watch out spread

11. Pre-trade messages

12. Uses of Pre-trade allocation
1. This allows to create a group of accounts to allocate the shares. A single method is
used across all the groups. Some of the allocation methods are Available Equity in
which the shares are allocated based on ratios derived from each account’s
Available Equity.
2. This also allows to allocate the shares on account-by-account basis using a
predefined calculation such as Ratio, Percentage etc. It is commonly known as
Allocation Profiles. So, the shares allocated are based on the rules set by us.

13. Uses of Pre-trade allocation
1. This allows to create a group of accounts to allocate the shares.
2. This also allows to allocate the shares on account-by-account basis using
a predefined calculation such as Ratio, Percentage etc.

14. Steps of Pre-trade allocation
1. Buyside sends a New Order request message specifying the following values within
the repeating group designated by NoAllocs <78>:
a. Sub-account mnemonic : One or more AllocAccount <79>.
b. Quantity to be allocated to specific sub-account : AllocShares <80>
2. Sellside sends Execution Report <8> messages for the “New” and resulting fills.
Using the above steps, if some pre-trade message has to be sent to a user with Account
3241 and quantity of shares as 60 units then the body of FIX message tags will contain
78=1|79=3241|80=60.

15. Steps of Pre-trade allocation
1. Buyside sends a New Order request message specifying the following values within
the repeating group designated by NoAllocs <78>:
a. Sub-account mnemonic : One or more AllocAccount <79>.
b. Quantity to be allocated to specific sub-account : AllocShares <80>
2. Sellside sends Execution Report <8> messages for the “New” and resulting fills.
Using the above steps, if some pre-trade message has to be sent to a user with Account
3241 and quantity of shares as 60 units then the body of FIX message tags will contain
78=1|79=3241|80=60.

16. Quotation and Negotiation
FIX Pre-Trade messages are divided into various categories. One of the main category is
“Quotation/Negotiation”.
The FIX API terminology can be used for Quotation/Negotiation.
1. The tag (35=R) indicates a QuoteRequest message.
2. The tag (35=S) indicates a quote message issues in response to a QuoteRequest in
step 1.

17. 01
References
● https://blog.knoldus.com/
● https://www.investopedia.com/articles/active-trading/012915/premarket-routine-sets-stage-tr
ading-day.asp
● https://www.wealthydaytrading.com/pre-market-trading/
● https://insight.factset.com/fix-protocol-enables-pre-trade-allocation
● https://www.interactivebrokers.com/en/home.php
● https://www.investopedia.com/articles/active-trading/012915/premarket-routine-sets-stage-tr
ading-day.asp
● https://www.timothysykes.com/blog/premarket-trading/
● https://www.warriortrading.com/premarket-trading/

18. Thank You!
jasmine.kaur@knoldus.com
https://www.linkedin.com/in/jasmine-k
aur-033021102/