Market Pre Open and Post Market Sessions | Pre-Open Market Stock Orders
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Market Pre Open | What are pre-open market and post market sessions and orders?
Pre-open session: The NSE invented the concept of the pre-open session in an effort to lessen stock volatility during the start of each trading day. On the NSE, the pre-market session runs from 9:00 to 9:15 AM.
Within the first eight minutes of the pre-market session, orders are placed, changed, or cancelled (between 9:00 and 9:08 AM). Limit orders and market orders are both viable. The order collection window will close at any point between 9:07 AM and 9:08 AM.
New orders cannot be placed after the collection window closes at 9.15 AM. Trades are confirmed after the placed orders are matched. Only the equity section can be used to place orders during the order collection period.
Post-closing session: Similar to pre-market orders, post-market order are only permitted for stock trading during the closing session. From 3:40 to 4:00 PM, the post-market or closing session is open.
People may make buy/sell orders in equities during this trading session (delivery segment utilizing CNC product code) at the market price, but keep in mind that even if you do, your order will be executed at the exchange's closing price. So, for instance, if Reliance's closing price at 3:30 PM is Rs. 800, you can place market orders between 3:40 PM and 4:00 PM to buy or sell Reliance at the market price (will be taken at Rs. 800).
Equilibrium Price Determination in Market Pre Open
Order modifications, order cancellations, trade modifications, and trade cancellations are not permitted during the order matching period. Before the commencement of the regular market, the deal confirmations are distributed to the appropriate members via their trading terminals. There is a quiet interval once order matching is finished to make it easier to switch from pre open session to regular market. All open orders are transferred to the regular market while keeping the original time stamp.
Market orders are at the established equilibrium price, whereas limit orders are at the limit price. All market orders are transferred to the normal market at the previous day's close price or adjusted close price/base price based on price time priority if no equilibrium price is found during the pre open session. As a result, trading on the Normal Market, Odd Lot Market, and Retail Debt Market begins at 9:15 am, following the conclusion of the pre open session. Within 35 minutes of the start of the normal market, block trading will be available.
The price that is set at the beginning is based on the demand-supply process. The equilibrium price is the price where the most volume is traded and it is also known as the price that meets the conditions that are set. There will be a small amount of orders that won't be matched when more than one price meets the conditions.
The equilibrium price is the one that is closest to the closing price from the previous day in cases where more than one price has the same minimum order mismatched quantity. The equilibrium price will be the previous day's closing price if it is the midpoint between two values that are closest to it. In the event of corporate action, the closing price from the previous day is changed to the closing price or the base price. Limit orders and market orders are both taken into account when calculating the equilibrium price. The price at the beginning of the day is the equilibrium price set during the preopen session. Only market orders that have both a buy and sell side present at the previous day's close price or modified close price/base price are matched. If no price is found during the preopen session, then the opening price is the previous day's close, modified closing price, or base price. The first trade in the regular market sets the open price.
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Can we trade before the market opens?
Trading is typically unrestricted during the pre-opening period. However, because to extreme volatility, certain brokers may exclude new traders from trading.
What are the pre-market timings in the Indian stock market?
On the Indian stock exchange, the pre-market session runs from 9 AM till 9:15 AM.
What is the pre-open session for IPO in the Indian stock market?
At 9 AM and 10 AM, there are special pre open sessions for initial public offerings. Orders can only be placed during the first 45 minutes, up until 9:45 AM.
The Bottom Line
Understanding how the prices from the previous day affect trade can help investors make the most of the NSE pre open session. They must first learn how to choose equities in the pre open market, though. The pre open session functionality in their trading account can then be activated by contacting their broker.
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Disclaimer: This article is for information only and should not be considered as recommendation to buy or sell any stocks.