So, traders, you must have come across the terms pre-market, post-market and after-market orders. This post explains, all these terms in detail, and you will never get confused again.
The National Stock Exchange started the concept of the pre-open session to reduce the volatility of securities during the market opening every day.
The pre-market session is between 9:00 AM to 9:15 AM. This session is into two parts.
During the first part, which lasts for 8 minutes that is between 9:00 AM and 9:08 AM, the orders are collected, modified or canceled. Traders are free to place limit orders or market orders during this part.
During the second part which lasts for 7 minutes that is between 9.08 AM to 9.15 AM, there is no scope to place new orders, orders previously placed are matched, and trades are confirmed.
So precisely you can place orders only for the first 8 minutes and only on equity segment.
Why are Pre-Market sessions needed?
- It is a session to discover the opening price.
- The opening price will be the equilibrium price based on the demand and supply of the security not based on the price of the first trade of a security.
- Eliminate opening volatility in the prices of the securities.
- Allow for overnight news in stocks to be reflected in the opening price.
As the case with pre-market orders, post-market orders are allowed only for the equity segment. The post-market session is held from 3:40 PM to 4:00 PM.
During this session, you can place buy/sell orders in equity at the market price, but even if you place a market order, it will be put on the exchange at the closing price.
This session is not very lively.
This facility is available on various trading/brokerage firms like Zerodha for traders who are unable to keep an eye on the markets from 9:15 AM to 3:30 PM.
There are certain time intervals during which an after-market order can be placed depending on your broker. You can decide your trades and place your orders before the market opens.
Happy Trading 🙂
Conclusion: Pre-market, Post-market, After-market Orders
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