Is there any possibility of trades getting executed in the pre-open market?

General
2

Yes, they can, between 9.08 am to 9.15am when order matching happens

Between 9:00 AM to 9:15 AM is when the pre-market session is conducted on NSE. During the pre-market session for the first 8 minutes (between 9:00 AM and 9:08 AM) orders are collected, modified or cancelled. You can place limit orders/market orders. After 9.08 AM to 9.15 AM no new orders can be placed, orders placed are matched and trades confirmed

4 Likes
3

In pre open session, trades will get executed if and only if, the opening price matches with your limit price. In all other cases, it will be pushed to the regular limit order queue which starts at 9:15 am.

During 9:08 to 9:15 order matching is done in the following sequence.

  1. Eligible limit orders Vs Eligible Limit Orders
  2. Eligible Limit orders Vs Eligible Market orders
  3. Eligible market orders Vs Eligible Market Orders

For example consider (assume 805 is the equilibrium opening price)

158 shares Sell Orders @ Limit Price 805 and

123 shares Buy Orders @ Limit Price 805

230 shares Sell Market Orders @ Market Price

146 shares Buy Market Orders @ Market Price

This is the sequence of order confirmation

  1. Eligible Limit Sells Vs Eligible Limit Buys (123 shares orders which are common in Buy and Sell)
  2. Eligible Limit Orders (Here Sell Orders are remaining) So 35 shares Sell Orders Vs 35 shares Buy Market Orders
  3. Eligible Market Orders (Here remaining 111 shares Buy Market Orders) Vs 111 shares Sell Market Orders

Finally the orders which will remain are

  • 119 shares Market Sell Orders which will be pushed to the regular market opening at 9:15 am as Limit Orders at the Limit Price of 805. If price remains or touches 805 when market opens these orders get executed.
  • Remaining all Limit Orders which are placed at different prices say 804, 803, 810, 806 etc are simply moved to regular market which opens @ 9:15 am as like their original limit orders

Note: Market Orders which gets ordered first (based on their timestamp) will get priority. So the 199 shares market Sell orders which are pushed to regular market are orders which could have been collected very late during order colelction period 9:00 to 9:07 am.

In summary, in the example a total of 269 shares are traded or (123+35+111) will get executed and confirmed to the broker or trading terminal before 9:15 am (during the pre market session).

Hope this clarifies!

3 Likes
4

very nice explanation…