Stock prices right on the 10am ASX open

[stockwhizben]

Hi guys, could someone fill me in...how do the prices come to be at the very open of trade? who does the calculation? i dont see how it can be market driven without the market opening (its a bit easier to understand market forces with the stocks duel listed in US or UK), you can take the open price in Oz as the closing price plus the overnight overseas movement - although this theory doesnt always work).

Does some one have a bit of a guess and then when the real market forces come into play at around 10.30ish, thats when you see a big drop off on the all ords chart?

I have always wondered about this.

Any insight would be great

 

[M34N]

Read this: http://www.asx.com.au/investor/education/basics/open_Close.htm

Explains the open prices for the ASX, a lot more detail can be found on the main ASX website, inparticular the Getting Started page.

It may pay (literally) to have a good understanding of how the market works, and the only way to learn really is to watch it daily and test out your theories first before putting any real money on the table.

Good luck.

 

[Trader Paul]

Hi Stockwhizben,

There's an opening "auction" overseen by the ASX, which balances out
the bids and offers, according to a set formula, which results in an
adjustment to the opening price for each stock, as it opens .....

..... the same system operates at market close, where the adjustments
are made about 10 minutes after the closing bell, at 4pm.

have a great weekend

paul



=====

 

[Nyden]

Hi guys, could someone fill me in...how do the prices come to be at the very open of trade? who does the calculation? i dont see how it can be market driven without the market opening (its a bit easier to understand market forces with the stocks duel listed in US or UK), you can take the open price in Oz as the closing price plus the overnight overseas movement - although this theory doesnt always work).

Does some one have a bit of a guess and then when the real market forces come into play at around 10.30ish, thats when you see a big drop off on the all ords chart?

I have always wondered about this.

Any insight would be great

I had a long post which wasn't very articulate! Sounded more confusing than anything else So here are the market phases, should answer your questions!



Pre-opening Phase
Pre-opening takes place from 7:00 am to 10:00 am, Sydney time. During Pre-opening:
Brokers enter orders into ITS in preparation for the market opening.
ITS does not trade orders.
Investors may enter orders on-line. The orders are queued according to price-time priority and will not trade until the market opens.
Overnight and overseas trades may be reported until 9:45 am, Sydney time. These trades must take place according to ASX Market Rules.

Opening Phase
Opening takes place at 10:00 am Sydney time and lasts for about 10 minutes. ITS calculates opening prices during this phase. Securities open in five groups, according to the starting letter of their ASX code:

Group 1 10:00:00 am +/- 15 secs A-B, e.g. ANZ, BHP
Group 2 10:02:15 am +/- 15 secs C-F, e.g. CPU, DVT, ECP, FXJ
Group 3 10:04:30 am +/- 15 secs G-M, e.g. GHP, KYC, LIB
Group 4 10:06:45 am +/- 15 secs N-R, e.g. QAN
Group 5 10:09:00 am +/- 15 secs S-Z, e.g. TLS

The time is randomly generated by ITS and occurs up to 15 seconds on either side of the times given above, e.g. group 1 may open at any time between 9:59:45 am and 10:00:15 am.

Normal Trading
Normal Trading takes place from 10:00 am to 4:00 pm, Sydney time. Brokers enter orders into ITS and ITS matches the orders against each other, resulting in trades i.e in this phase ITS automatically matches all trades in Price/Time Priority on a continuous basis.

The vast majority of trades take place during Normal Trading.

Pre CSPA
Between 4:00 pm and 4:10 pm, Sydney time, the market is placed in Pre-open. Trading stops and brokers enter, change and cancel orders in preparation for the market closing.

Closing Single Price Auction
The Closing Single Price Auction takes place between 4:10* pm and 4:12 pm, Sydney time.

ITS calculates closing prices during this phase.

*Random + 60 secs

Adjust
The Adjust takes place from 4.12 pm to 5:00 pm, Sydney time. During this phase:

Brokers may ‘tidy up’ their orders by cancelling unwanted orders, amending orders, etc.
New orders cannot be entered and ITS does not execute trades.
Brokers wishing to trade contact each other by telephone. ASX Market Rules ensure that trading takes place in an orderly fashion.
Trading during the Adjust phase is referred to as overnight trading

 

[stockwhizben]

thanks very much folks. very informative

ps. damn dow down again friday. grrrr

 

[brerwallabi]

Pre CSPA
Between 4:00 pm and 4:10 pm, Sydney time, the market is placed in Pre-open. Trading stops and brokers enter, change and cancel orders in preparation for the market closing.

You and I may also enter between 4.00pm and approximately 4.10pm.

 

[diliff]

In the pre-open..

I've noticed that the bids are often significantly higher than the asks in the pre-open trading, and I'm a bit confused about why... I assume that if you're the highest bidder, you will be first in line for the trade, but will your trade be executed at that price, even if it is higher than anyone is asking? What is the actual mechanism and how exactly does it work?

 

[reece55]

Re: In the pre-open..

I've noticed that the bids are often significantly higher than the asks in the pre-open trading, and I'm a bit confused about why... I assume that if you're the highest bidder, you will be first in line for the trade, but will your trade be executed at that price, even if it is higher than anyone is asking? What is the actual mechanism and how exactly does it work?

We've had many people ask this question and it is located somewhere in the archives. But basically, there is an algorithm that works out where an equilibrium exists, based on volume, to obtain an open price. The ASX have a good description here

Cheers