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Thread #1,000,000 about the pre-open!

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ChomChom

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Hi,

I could never understand that. Some times, in the morning, before the market open and I look at the market depth of some companies, there are off market trades at a much higher price.
Then, in the BUY columns, the price is much higher and in the SELL column, the price is much lower. (like for MQG, NAB, PDN, WBC...etc) this morning...

This then seems to be inverted when the market opens. Most of the time this kind of situation is sign of a bad day for the share.

Is that some kind of trap?

Must look like a very stupid question but I couldn't find the answer anywhere :eek:
 
Re: What does it mean when the market depth before opening is highl

Pre-market auction.

http://www.asx.com.au/resources/education/basics/open_Close.htm

I remember the first time I came across this. I bought TLS the day before for $4ish. On the open auction, it went as high as $6'ish on the SELL side... i thought I made 50% gain overnight, but on the open it actually openned around where I bought it the day before. :)
 
Re: What does it mean when the market depth before opening is highl

Yes for god sake can someone (Mods?) put together a good explanation with some screen shots and make it a sticky.

Please. what do we pay you slackers for???

Oh thats right we don't pay you.
 
Re: What does it mean when the market depth before opening is highl

Thanks guys, that helps me a lot... Yeah, it should be sticky, I'm sure lots of beginner are wondering what it means, but when you search, it's pretty hard to know which keywords to use to find the answer

Cheers :)
 
Re: What does it mean when the market depth before opening is highl

Ok, it's pre-market auctions... and then?

What's the explanation? Most of the time, when the off market price is going up, why are the orders in the queue following before the market opens?

Is it that people are anticipating that it will go down, then are placing orders BUY orders at a much higher price to lure beginners so they are moving their orders up, so these people can place their owen BUY orders lower in the queue?? Is it a conspiracy? :cool:
 
Re: What does it mean when the market depth before opening is highl

ChomChom said:
Ok, it's pre-market auctions... and then?

What's the explanation? Most of the time, when the off market price is going up, why are the orders in the queue following before the market opens?

Is it that people are anticipating that it will go down, then are placing orders BUY orders at a much higher price to lure beginners so they are moving their orders up, so these people can place their owen BUY orders lower in the queue?? Is it a conspiracy? :cool:
Click to expand...

No its just so they get filled on the open. It has nothing to do with sucking in newbies. Its just so the order gets filled.
 
Re: What does it mean when the market depth before opening is highl

I still don't understand, that's what I was thinking at first, but I've tried many times to put a SELL order at a higher price... I was one of the first in the queue and there were BUY orders higher that my SELL price... my orders have never been filled :confused:
 
Re: What does it mean when the market depth before opening is highl

It's simply a way to guarantee that your order is filled at the open or close, there's generally nothing sinister about it.

I trade a mechanical system that was designed around open and closing prices therefore I try to guarantee that my orders are filled at that time, which may mean placing what appear to be well out of the money bids or offers.
 
Re: What does it mean when the market depth before opening is highl

It really boils down to how desperate you want to own stocks and/or dump stocks.

The more desperate, the more extreme the price you will have to bid/offer.

Once the calculation for the open price is done (with respect to the volume as well). Then any BUY ABOVE that price will be filled. Like-wise, any SELL BELOW that price will be executed.

I have seen at times ridiculous offers with huge volume that appears a few seconds before the opening - skewing the opening price calculation to lure people to place orders at even more extremes to get filled, then only to pull that order out at the very last second... shonky....
 
Re: What does it mean when the market depth before opening is highl

ChomChom said:
I still don't understand, that's what I was thinking at first, but I've tried many times to put a SELL order at a higher price... I was one of the first in the queue and there were BUY orders higher that my SELL price... my orders have never been filled :confused:
Click to expand...

A sell order would need to go in at a lower price.
Do you have streaming data? A lot of orders come in only seconds before open/close.
 
Re: What does it mean when the market depth before opening is highl

ChomChom said:
I still don't understand, that's what I was thinking at first, but I've tried many times to put a SELL order at a higher price... I was one of the first in the queue and there were BUY orders higher that my SELL price... my orders have never been filled :confused:
Click to expand...

It fills the lowest sell orders and the highest buy orders first, until a common price is met then all the orders go through at that price.

It may take a while to fully understand.

There is certainly no conspiracy, lol.
 
Re: What does it mean when the market depth before opening is highl

Thanks for you patience guys, that's very kind to explain to a newby like me :)

I'm still wondering how I could make a 40% return on my first 3 months trading, must be beginner's luck :D
 
Re: What does it mean when the market depth before opening is highl

Guys I will post a video capture of the open in a couple of stocks today or tomorrow. have to check the quality of what I got today. may help people without live data.
 
Re: What does it mean when the market depth before opening is highl

Ok here is the opening Auction for BHP on today's open.
It starts at about 9:30 and shows the orders being placed into the market to get a fill on the open.(I have sped it up to a 2 min vid)

What you have to look for is the indicative opening price which is around $40.00. As you can see there are many buy orders placed way above the indicative open and many sell order placed way below that, some $10 below or above. This is not a conspiracy. Its just to give the person assurance that the order will be filled on the open. watch about 140 sec into the video when BHP opens. What you will see in the trades is 233 orders go through @ the opening price. That was what all the strange orders were placed into the market for. Any BUY order above the indicative open were filled. Any sell order below the indicative order were filled. Everything else was left in the order book.

The matching to get the opening price is done by the ASX based on price & volume as per the above asx link.

 
Re: What does it mean when the market depth before opening is highl

A picture paints a thousand words!

Well done TH :)
 
Re: What does it mean when the market depth before opening is highl

That's great, thanks a lot! :)
 
Re: What does it mean when the market depth before opening is highl

Here is another one but this time its todays closing Auction on OXR.

As you can see the last trade was $2.11 at 4:00 pm.

The closing Auction is the same process as the opening one. You have Buy orders much higher than the last traded price and Sell orders much lower. But on a volume and price level they normally match reasonably close to the 4:00 pm close. If you watch closely around 120 seconds you can see all the shuffling going on to get in the closing auction around the $2.10 level.

 
Re: Thread #1,000,000 about the preopen!

I see that these vid's have lost some resolution over the last day??:confused:

Will try and upload these file to my blog and see if I can fix this :mad:
 
Re: Thread #1,000,000 about the preopen!

Trembling Hand said:
I see that these vid's have lost some resolution over the last day??:confused:

Will try and upload these file to my blog and see if I can fix this :mad:
Click to expand...

please upload the raw vids, I would like to see them with better resolution thanks.
 

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