The Reserve Bank of India now permits resident Indian citizens to invest a maximum of $250,000 in American and international share markets. The apex bank extended this facility to Indians in 2020.
As a result, thousands of Indians are now making money by buying and trading stocks of American companies and Exchange Traded Funds (ETFs) offered by US-based financial institutions.
Most Indians are confused about the US market opening time. and in this article, I not only going to guide you about the timings but will also share the important steps to do before the US market opening time in India.
Reasons to Invest in US Stock Markets
If you’re into stock trading or building wealth for the future, American stock markets offer excellent opportunities.
That’s because a lot of American companies are recording high growth rates and the prices of their stocks continue to rise daily.
The same holds true for American ETFs. For beginners, an ETF is like a Mutual Fund. It consists of a bundle of different stocks of top companies.
However, unlike Mutual Funds, an ETF is traded on the stock exchanges daily. Hence, the price of an ETF is also prone to ups and downs, depending upon the prices of stocks in the bundle, on any particular day.
If you’re among those Indians that wish to invest in US stock markets or already have a brokerage account with an Indian or foreign stockbroking firm, here’re 10 important things to do before the American stock markets open.
Following these 10 steps could help you get the best from your stock trading experience on US stocks markets or build wealth.
11 Important Things to Do Before US Stock Markets Opening Time
These 10 important steps are based on my personal experience. And trust me, I’ve made a lot of money by simply following these steps. I’m not a stockbroker by any yardstick.
Nor do I claim to be an expert in this field. Instead, I’m just an ordinary Indian hoping to cash in on the US stocks markets.
1. Know the Timings of NYSE & NASDAQ
That’s because the US follows the Daylight Savings Time system. As a result, the stock market can open one hour before you’re prepared, if DST is already in force.
Generally, DST is in force from mid-March to early November. The US stock markets open at 9.30 am and close at 4 pm, Eastern Time (for New York).
Therefore, get a spare watch or clock and set it to American Eastern Time to ensure you don’t get late to buy stocks or trade on US stock markets.
2. Check Global News
The US is a superpower. Hence, everything from natural disasters to pandemics, conflicts to terrorist acts abroad can affect the movement and prices of American stocks.
That occurs because American companies operate worldwide. If the foreign operations of an American company are affected by politics, conflicts, disasters and other factors. This could impact the prices of American stocks too.
Therefore, reading or listening to such news can help you somewhat foretell if any company stocks might surge or drop due to such occurrences.
Here it’s important to note that all conflicts, political situations and disasters don’t affect stock prices. Only serious ones do.
Also, monitor the news for any announcements made by the White House or US leaders. Because some of their statements can also affect stock prices sometimes.
3. Check Closing Index of NYSE and NASDAQ
The NYSE and NASDAQ operate from Monday to Friday. Therefore, the next important thing to do is check the closing index of these stock markets when you wake up the next day.
That’s because the stock market closing time is 4 pm ET, and you would most likely be asleep. The time would be 1.30 am in India.
You can easily find the index closing by referring to excellent websites such as NYSE, NASDAQ Market Watch, Bloomberg and Reuters.
They carry exact details of the closing indexes. The closing index would show whether the stock market went up the previous day or down due to some reason.
And the previous day’s performance usually indicates a market trend that could’ve risen due to some specific reason.
4. Read Market Analysis
Thanks to TV and the Internet, it’s very easy to get a market analysis for the previous day from various reputed and reliable websites such as Bloomberg, MSNBC, CNBC and Reuters, Associated Press or even Indian newspapers.
These analyses will give you a clear picture of why the US stock markets went up or down the previous day, before US market opening time in India.
Often, such analyses will contain specific details such as stocks of a particular sector or industry that rose or fell or even remained stable during the previous day’s trading session.
That can provide you with an opportunity to invest in such stocks. Because, the main trick here to make money is to buy American stocks cheaper than their market value and sell when the index soars again.
Or you can simply hold the stock. However, market analyses will provide a clear picture.
5. Monitor Asian Markets
Generally, and as a rule, the indexes of all stock markets in the world are somewhat interlinked.
If there’s a drop in indexes of markets in Japan, Singapore, South Korea, Hong Kong and India, the same could affect US markets too.
When you monitor Asian stock markets and find that indexes of all have risen or gone down, there’s definitely some affecting factor.
Therefore, research into that factor by reading news and stock market reviews.
Monitoring Asian markets are fairly easy. They open before 1.30 hours and 2.30 hours before Indian stock markets. And close accordingly too.
If you notice a downwards trend in Asian markets on any day, it would most likely mean that American markets too would be affected.
And if there’re surges in Asian markets, the American stock markets too would witness a rise. Monitoring Asian markets are very simple since most financial newspaper websites will provide live updates.
6. Decide on US Stocks to Buy or Sell
This is one of the most important things you’ll have to do Before the opening time of the US stock market in India. After reading news, finding closing indexes and studying the movement of the Asian markets, decide on which American stocks you wish to buy, sell or hold on to.
That would give you a clearer picture of what you intend to do when the US stock markets open.
There’s an old adage that goes: “Failing to plan is planning to fail.” The same holds true for every stock market.
Once you decide which US stocks you wish to buy or sell, find out what would be the best price available.
And if you’re into trading, set a limit for the price. That would help you prevent underselling or underquoting for a specific stock.
And if there’re reasons to hold a stock, make sure it’s good and valid.
7. Consider Preopening Sessions
NYSE and NASDAQ have preopening sessions from 8 am Eastern Time to 9.30 am, when the stock markets open for daytime trading.
You can also place orders during these timings without actually having to pay the money upfront. This means, if your bid is for a proper price, you will technically be holding the stocks.
All it requires is adequate funds on your stock trading account. This system is known as “futures and options.”
However, before entering the futures and options type of trading, I would strongly suggest you study how they work and start off with smaller amounts of money.
Once you gain enough experience in futures and options trading, you could play with larger sums.
This is one excellent way to make money on US stock markets, if you have adequate knowledge about the various companies on which you’ll bet your money.
8. Fund Your Trading Account
The next important thing to do before the US stocks market opens is to fund your trading account.
That means, putting in enough money if you’re planning on buying stocks or playing with futures and options.
It is best to fund your account well in advance- at least an hour before- the trading starts.
That’s because millions of individuals will be funding their accounts or transacting once the trading on NYSE and NASDAQ begins.
This could cause delays in your transactions, especially if you have a slower Internet connection.
9. Get Tips from Your Stock Broker
In the US, as anywhere in the world, you cannot buy stocks directly from the stockbroker. Instead, you’ll require an online trading platform that your stockbroker provides.
And often, stockbrokers also provide vital tips about which stocks to buy or sell and market predictions.
That’s because all stockbroking companies want to attract the highest number of customers to their trading platforms.
Usually, good stockbrokers provide excellent tips on what to buy, sell or hold on and some also predict prices that you could expect during the stock trading session.
These tips are given by experts in the field. Therefore, be sure that you read these tips carefully before taking your own decisions.
10. Keep Tabs on US Markets
And finally, the best thing to do is keep tabs on the movements of the NYSE and NASDAQ when their preopening session starts and the indexes.
If the indexes are going down, the market would most likely be bearish for the day. And if they’re going up, you could sell some stocks and make money.
One thing to bear in mind is that stock markets have this trend of sudden drops and rises. Therefore, be alert enough to notice such drops and rises immediately.
Understandably, the time difference between India and New York might make that a bit hard. However, it is still worth burning that midnight oil if you’re into making money on US markets.
11. Dollar- Rupee Exchange Rates
One of the major factors that Indian investors on US markets need to take into account is the US Dollar to Indian Rupee exchange rates. These rates fluctuate daily.
If you’ve bought stocks when the US Dollar rate was high, then selling the stock or intra-day and inter-day trading could actually set you back through losses in the exchange rate.
Therefore, be very careful about this. The best way to avoid losses due to rising prices of the US Dollar is by funding your account and buying stocks when the Indian Rupee is relatively higher.
However, there’re no ways to predict when currency prices can rise or fall. They too depend upon situations both within and outside India and America.
This guide should give you some basic ideas about important things to do before the US stock market opens.
However, I would suggest you take a full course on online trading and buying and selling stocks in US markets before investing large sums of money.
These courses are available on e-learning portals such as Udemy, among others. And then there’re various offline courses too that could help you.
Avoid the lure of investing in cheap or penny stocks because they won’t fetch much money for your efforts.