What Is Pre Open Session?

Premarket trading is the term for trading that takes place on exchanges prior to the start of regular market trading hours. Between 9:00 AM and 9:15 AM is when premarket stock trading occurs. Premarket trading sessions typically have substantially lower trading volumes than regular trading hours. 

Traders employ pre open market trading for a number of reasons, including:

●    To determine the direction the market and specific assets will take once regular trading begins.

●    To make an effort to anticipate how the market will react to breaking news about international events, political unrest, and other elements that could have an impact on markets or specific stocks.

Pre-Open Session: What Is It?

Pre open market sessions are held on both the National Stock Exchange (NSE) and the Bombay Stock Exchange from 9:00 AM to 9:15 AM (BSE). The pre-open market is essentially the trading period that occurs right before the regular stock market timings.

What Happens In Premarket Trading?

The 15-minute session is primarily divided into 3 slots:

First Session: It is referred to as the order collection period between 9:00 to 9:08 AM. Orders may be changed or cancelled during this time.

Second Session: Order matching and trade confirmation time is from 9:08 to 9:12 a.m. During this time, orders are confirmed based on the "Equilibrium price determination" or "Call auction" method of price identification. Order modifications or cancellations cannot be made during this time.

Third Session: It is referred to as a buffer time between 9:12 and 9:15 am and it helps with the transition from the pre-open market to the regular market session.

How Is The Opening Price Of Stock Determined? 

Before understanding how opening price is determined, let's review a few basic concepts, such as the different types of orders in the stock market:

Market Orders: These orders are executed in accordance with the current market rate of stock and do not contain a specific price quote for purchasing or selling the stock.

Limit Orders: These are executed after matching orders are discovered on the stock exchange which meet the price specifically quoted in the order. 

Based on the demand-supply principle, the opening price is determined. The price at which the maximum volume is executed is known as the equilibrium price. The equilibrium price is the price at which there are the smallest amount of unmatched orders when more than one price satisfies the stated conditions. In situations where more than one price has the same minimum order mismatched quantity, the equilibrium price is the one that is closest to the closing price from the previous day. The previous day's closing price will be used as the equilibrium price in the event that it is the midpoint of two values that are the closest to it. The opening price for the day is the equilibrium price established in the pre-open session. Only market orders are matched at the previous day's close price or modified close price/base price when they are present on both the buy and sell-side. The opening price is the previous day's close, modified closing price, or base price. The price of the first trade in the regular market is the open price if a price is not found during the pre-open session.

Where Should Beginners Invest? 

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