Price/Time Priority

[Lukytom92]

Hello

Just have a question about this. So I understand that in this system it is a "first come first serve" basis, provided that your trade at a specific price.

Does this apply when you place a trade outside market hours? Say immediately after share market closes you place an order. Does that mean you will guaranteed to acquire your share?

Sorry for my newbieness.

 

[Trembling Hand]

Hello

Just have a question about this. So I understand that in this system it is a "first come first serve" basis, provided that your trade at a specific price.

Does this apply when you place a trade outside market hours? Say immediately after share market closes you place an order. Does that mean you will guaranteed to acquire your share?

Sorry for my newbieness.

Nope. It depends on the opening price the next day and where it trades during the day. If a share closes at $1.00 today and you place a buy limit order for $1.05 tonight but the shares open at $1.08 and doesn't trade below that level your order will not be filled.

 

[Lukytom92]

So how does that happen? Is it just over night someone bids 1.08$?

 

[So_Cynical]

So how does that happen? Is it just over night someone bids 1.08$?

Yep someone had bid $1.08 or bid "at market" during trading hours and there was a seller at $1.08

If you look at the market depth for a very lightly traded stock you will often see something like this... all the buyers with limit orders at say $1.10 and lower and the sellers at $1.20 and higher....so no trades can happen until either the buyers or sellers met the buy/sell price.

 

[Trembling Hand]

So how does that happen? Is it just over night someone bids 1.08$?

Remember you cannot have a sale or trade without an agreement on price between a buyer (at $1.08 to buy) and a seller (to sell at $1.08).

The reason it may raises from close to the first trade the next day are many, like a good US over night session or positive company news etc. Anyone who has stock to sell thinks they can get more for it today than yesterday, therefore offers to sell it at a higher price. Anyone who wants to buy in has to take the higher price or wait until a sell offers it at a lower price. Just like any Auction.

 

[IB12]

Outside regular market hours market-makers will usually have an inter-dealing period where they trade amongst one another to reconcile positions. During this period the pricing may adjust based upon market conditions and new information. When the prices adjust, retail traders will only be allowed to trade on the new prices at regular trading hours.

 

[Trembling Hand]

Outside regular market hours market-makers will usually have an inter-dealing period where they trade amongst one another to reconcile positions. During this period the pricing may adjust based upon market conditions and new information. When the prices adjust, retail traders will only be allowed to trade on the new prices at regular trading hours.

There is no market makers on the ASX.

The only trades that take place outside of trading hours are off market transfers.

 

[IB12]

There is no market makers on the ASX.

The only trades that take place outside of trading hours are off market transfers.

Well okay. Fair enough. But the OP didn't specifically say "ASX".