Pre Market is a platform where traders and investors can buy and sell digital currencies before their official launch. This type of transaction provides users with early access to the tokens and gives traders the opportunity to discover the price of the tokens when they are released. Stay with us until the end of this article as we explore what a premarket is and how it works.

What is a premarket in the crypto market?

In the digital currency market, Pre-Market is the platform designed to buy and sell tokens before they are listed on the exchange. Pre-release markets are usually set up on digital currency exchanges or similar platforms and are very similar to regular digital currency trading; With the difference that in the premarket, the focus is on tokens that have not been released yet.
 

When a token is published on the blockchain network and offered to users, exchanges list it so that traders can buy and sell the token. But in the premarket, traders can buy and sell these tokens during a period between the announcement of the token allocation and its distribution or official listing in the exchange.
 

For example, suppose a crypto project wants to release its token in December 1403 and list it on exchanges. A month before the token release date, Kocoin Premarket will launch this token in November and traders can pre-buy or pre-sell the tokens of this project before its release.Of course, the pre-market in digital currencies is not only limited to token transactions; In some cases, it is also possible to trade "protocol points" which can be used as a benchmark for receiving future airdrops.
 

Another example to better understand the pre-market
Let's say you participated in the NatCoin airdrop and you know that you will receive at least 10,000 NatCoins. Knotcoin airdrop is not yet done and you haven't received any tokens, but an exchange like Kcoin has launched a Knotcoin pre-launch market. Your prediction is that the maximum price of NatCoin at launch will be $0.02. You pre-sell your 10,000 Natcoins at $0.02 per unit.By doing this, you will be sure that you will have at least $200, whatever the price of NatCoin is when you release NatCoin and deposit tokens into users' wallets. Even if NatCoin is lower than your predicted price, you will still get your $200.
 

Another interesting use of the pre-market is to profit from your predictions. For example, imagine that you have not participated in the NatCoin airdrop at all, but you predict that the price of NatCoin will not be more than $0.02 at launch. In such a case, you place a sell order of 10,000 natcoins at a price of $0.025 per unit in Premarket.
When the NatCoin supply and your prediction come true, then you can immediately buy 10,000 NatCoin from the market for a total price of $200 and deliver to the premarket order buyer for $250. In this case, you have made a profit of $50 without participating in the airdrop.

How does  pre-market work?

In the pre-release market, which is usually done on digital currency exchanges or similar platforms, users can place buy or sell orders. Those who are eligible to receive tokens via airdrop or initial coin offering will put their tokens up for presale. Buyers who wish to pre-purchase tokens register a purchase order.

It is interesting to know that you don't always have to be eligible to receive the token in order to participate in premarket transactions. Professional traders sometimes trade based on their predictions in the premarket.

For example, a trader who predicted the maximum price of a token at the time of its release to be $2 would place a sell order at a higher price, say $3, in the premarket.
If someone takes this order and the trader's prediction turns out to be correct, the trader will buy his commitment amount from the market at the price of $2 and sell it at the price of $3 when the token is released; This means he has made a profit of $1 per token.

Another way to profit from the pre-market is that,

For example, you predict that the token you will receive in the airdrop will have a much lower price than the pre-market at the time of launch. Then, in the premarket, you sell it at a higher price and avoid a possible loss.

How to place orders in Premarket

Depending on the conditions announced by the platform, the seller and the buyer must deposit the entire purchase or sale price or a percentage of it as collateral in the platform. The settlement date, which is at the same time or after the token release date, is determined by the platform. When the settlement date is due, the sellers are required to deliver the tokens to their trading account to be transferred to the buyer's wallet.

In case of successful delivery of the tokens, the sales amount is transferred to the seller's trading account and the tokens are transferred to the buyer. However, if the tokens are not fully delivered within the stipulated time, the entire transaction fee will be deducted and the rest of the deposit will be returned to the seller. In the case of the buyer, the deposit is fully deposited into his account.

Different platforms have different fees for pre-release trades. For example, the Kucoin exchange that launched the Hamster Combat Token (HMSTR) pre-launch trading announced the collateral amount at 100% of the purchase or sale price and the commission at 2.5%. The commission amount is deducted from the buyer and seller during the settlement. But most of the Iranian exchanges that have a pre-market market do not charge a fee for the pre-market.

In general, you can operate in premarkets in two ways, which we will explain below:

1. Activity in the Perimarket as a token/point buyer:

The process of registering a purchase order in Premarket is that you place a purchase order for a specific amount of tokens at a specific price. In this case, you must deposit the total price (or a percentage of it) as a deposit. If a seller is willing to sell their tokens at that price in the future, they will take your order.

When the settlement is due, the seller is required to deposit the tokens into their account within a certain period of time, which is usually a few hours after the token is listed on the exchange. The Premarket platform will transfer the tokens to your account and deposit your collateral to the seller's account. An amount is also deducted as a fee.

2. Operating in the Perimarket as a token/point seller:

If you wish to pre-sell your tokens, you must submit a sell order that includes the number of tokens and the bid price. After placing the order, you deposit the total amount of the order as a deposit on the platform. The deposit amount may be 100% or a part of the total amount of the proposed sale.

If the buyer takes your order, he must deposit the same amount or a part of it. When the settlement is due, you are required to collect and transfer the specified token amount to your account on the platform within a few hours after the token is listed on the exchange. After the transfer, the transaction fee will be deducted and the rest of your deposit will be credited to your account along with the total price of the tokens (i.e. the buyer's deposit). Then, your tokens will be transferred to the buyer's account.

Types of perimarket

In the crypto market, there are generally two types of premarkets:

Pre-TGE (Pre-TGE) Token Trading Market

One of the most popular types of premarkets is the Pre-TGE (Pre-TGE) token exchange markets. In this type of marketplace, users can trade tokens before they are distributed or listed. Sellers are usually those who have received tokens via airdrops or participated in presales.

Points pre-Market

Another type of fair market is Points Markets. Crypto projects award users with points as a reward for their activities. Although these points have no direct monetary value, some projects may convert them into tradable tokens. These markets allow users to buy and sell points.The points market is similar in structure to the pre-TGE markets, except that instead of tokens, points are traded.

The benefits of premarket

Premarket provides investors with several benefits that can help improve the trading experience and reduce risk. Here are some of these benefits:

1-Early price discovery

One of the key advantages of the premarket is the possibility of early price discovery. This capability allows investors to assess the possible impact of external factors on the market and interpret price fluctuations outside official trading hours. This insight can provide indications of future market trends and possible moves before official trading begins.

2-More access

Premarket allows traders and investors to access a token before it is released. This possibility allows traders to get more profit from the token with proper analysis and strategy. Some tokens in the pre-release market have lower prices than when it was listed.

Pre-market risks

Premarket has different risks than normal trading markets; Because the methods of analysis and decision making are different in it. In the following, we examine some of these risks.

1-Less liquidity

One of the main challenges of the perimarket is low liquidity. Compared to normal digital currency markets, such as the spot or futures market, the premarket is usually associated with less liquidity, which leads to an increase in the spread between the bid and offer prices. As a result, traders may face difficulties in making large trades.

2-Limitation of participation

In addition, the smaller number of traders and institutions active in the premarket can lead to price movements that do not reflect actual market conditions. These fluctuations can mislead early traders, especially since the trends seen in the Pre-Market may reverse as the Tokens officially launch and more participants enter the market.

summary

In the world of digital currencies, both on centralized and decentralized platforms, the premarket is a platform for investors looking for early opportunities in new tokens. This stage is associated with high profitability potential, especially if there is a significant demand for the token in question.

However, investors should approach this market with caution as it is usually associated with greater volatility and risk. Effective risk management and having a research-based strategy are of great importance. Investors should only enter this market with capital that they are prepared to lose in order to take advantage of emerging opportunities in this area in a balanced manner.

also read : Unlocking Airdrops: A Simple Guide for Everyone