What is pre and after market period? Can one trade during this time?

General
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Hi,

Below is the answer for your Query:

1. Pre-market Orders:

NSE started the concept of pre-open session a few months back to minimize the volatility of securities during the market opening every day. 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. So technically you can place orders only for the first 8 minutes and only on equity segment. More on Pre-market orders on this link.

2. Post-market Orders:

Similar to pre-market orders, post-market orders are allowed only for equity trading. The post-market session or closing session is open from 3:40 PM to 4:00 PM. During this session, people can place buy/sell orders in equity (delivery segment using the CNC product code) at the market price, but do note that even if you place a market order it will be placed on the exchange at the closing price. So for example, if the closing price of Reliance at 3:30 PM is Rs. 800, between 3:40 PM and 4:00 PM.

you can place market orders to buy/sell Reliance at market price (will be taken at Rs. 800). Post-market session is not very active and you can look at the movement of stocks by opening the marketwatch window from 3:40 PM to 4:00 PM.

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Check this post Yash. 

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Premarket - 9:00 am to 9:07 am >>>>You can place orders and if opening price (also known as the equilibrium price) is same as your limit price, then your trade will be confirmed (executed), otherwise your order will be pushed to 9:15 am as normal limit order.

Postmarket - 3:40 pm to 4:00 pm>>>> You can place orders as CNC delivery trade at closing price of the day, if buyers/sellers are available then your trade will be confirmed at closing price. For selling you should have the shares in demat account.

Aftermarket - 6:30 pm to 9:15 am >>> You can place offline orders which will get placed when market opens next morning at 9:15 am.

Yash,

That NSE  link explains it very well, but you need to stare at the ppt for sometime and understand what those numbers are. I know it is somewhat difficult. It took me almost half an hour. LOL.  If you are interested let me know, I will explain in another post.

Edit: Yash, I have explained below. Hope you will understand now.

Case 1: No matching price (Opening price is same as yesterday evening closing price=50.70)


Case 2: Only one price is matching (The matching price is opening price)


Case 3: Two or more matching price but with difference imbalance values (The matching price with low imbalance value is opening price)



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At 50.50 we get total 57 shares (20+19+18) as Buyers - Buyers are ready to purchase at this price, even buyers at 50.55 or 50.60 will be ready to buy at a cheaper price, so their quantity also need to be added. But only 39 shares as Sellers are available to sell at 50.50. So 39 shares can be matched and (57-39=18 shares will be remaining as buy qty, this is imbalance)

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 At 50.55 we get total 39 shares (20+19) as Buyers – Buyers are ready to purchase at this price, even buyers at 50.60 will be ready to buy at cheaper price, so their quantity also to be added. Here more number of sellers are available total 77 sellers, even seller at 50.50 will be ready since he is getting at higher price, So (39+38=77), total 77 sellers are available. Now, 39 shares can be matched leaving 38 shares on Sell side as imbalance (77-39 = 38 shares)

Case 4: Two or more matching price but with same imbalance values (The opening price will be the one closer to yesterday’s closing price)


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Apply same logic as Case 3

**

 Apply same logic as Case 3

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Hi Kazi…Thanks for the explanation!..i went thru the link (ppt)…i thing that i still dindt get in the exchange mechanism of setting the equilibrium price…to clear the trades…i mean there will be buy and sell trades at different limit price…so how does the exchange decide the price to execute the trades & which trades to execute…
Also, how does execution of post market trades occur?
cheers!
Yash.