Have you ever heard of a trader making a whopping $10,000 (approximately 8 lakh in Indian rupees) by just selling a token before it was listed? One of my trader friend made it happen. But how exactly did they do it?
In the cryptocurrency market, there are tons of trading strategies to maximize profits, and the strategy my friend used is called pre-market trading. But what exactly is it?
Don’t worry, I got you covered. In this article, we will learn:
• What is pre-market trading?
• How does it work?
• Benefits and risks of pre-market trading
• Explore the best pre-market platform
What is pre-market trading?
In traditional stock market pre-market sessions, traders take positions in those early hours before the stock exchange officially opens.
If there’s any kind of important news about a company or economy, which might affect the stock prices traders take positions in pre-market for good returns
For example: If a company announce a good news, traders might buy its stock early before the main market hours through pre-market, hoping the rice will rise.
What is Crypto Pre-Market Trading and How does it work?
Crypto pre-market trading may sound similar to stock pre-market trading because of the term “pre-market”, but the cryptocurrency pre-market trading is different from the traditional stock pre-market trading, as you might know that cryptocurrency markets never close and they are open always (24/7) so when we talk about crypto pre-markets we are referring to platforms where traders can buy and sell token’s before the official listing.
These platforms allow traders to buy and sell new tokens at a desired price before they are officially launched or made available to the public, usually around their scheduled Token-Generation-Event (TGE).
How does it work?
Pre-market trading works similar to P2P (peer-to-peer) trading, but with one key difference: the pre-market platforms holds funds until the trade terms are met.
In the crypto market, we have two pre-market trading options:
🔸Decentralized Pre-market Trading: Platforms uses smart contracts to automate transactions that ensure trades happen as agreed, without a middleman.
🔸Centralized Pre-market Trading: Platform acts as the middleman, holding and releasing funds when the trade is complete ensuring everything goes smoothly.
Traders can set buy or sell orders with their price and amount. Sometimes, sellers need to put down collateral (a security deposit) to make sure they complete the trade.
Buyers pay upfront, and their money is held until the seller delivers, keeping the trade fair and secure.
Benefits of Crypto Pre-Market Trading:
🔸Lower Prices: You can buy new tokens at cheaper price from the official listing price.
🔸Exclusive Access: You get to invest in tokens that aren’t available to the public yet.
🔸Price Insights: Trading early shows you how much interest there is, helping you predict future prices.
Risks:
🔸Low Activity: Not everyone participates in pre-market trading, making it hard to complete trades due to low activity.
🔸Price volatility: Prices after official listing can be lower than your buying, which means you might lose money.
🔸Order Issues: Sometimes your trades won’t go through if there aren’t enough buyers or sellers at your rate.
Best Pre-Market Trading Platform:
Binance is your one-stop trading platform, where you get various trading options like spot pre-market trading allowing traders to buy and sell tokens even before they are officially listed. If you’re an investor in Binance Launchpool projects, you also get an extra benefit: you can sell tokens farmed from these projects in the pre-market. Recently, Binance successfully completed it’s first pre-market trading for the Scroll token through Binance’s spot pre-market trading feature.
Visit Here: To learn more about Binance Spot Pre-Market Trading
Now you understand pre-market trading is an opportunity for high returns with benefits and risks. Always remember to keep risks in mind before jumping in. Thanks for reading, and happy trading ahead!
