Projects: GOLD/HALLOYSITE/LITHIUM/COPPER/HEAVY METALS, page-711

Hope this clears it up for you


ASX Pre-open from 7am to 10am

Between 7:00am – 10:00am AEST, we have what’s known as the ‘Pre-open’ market phase. During this time, orders can be entered into the market but there is no trading going on.

Simply, buyers and sellers quote the different prices they are willing to accept (sellers) or pay (buyers) for their shares. At 10am (Open), when the market opens for trading, the overlapping bids and offers which exist within the market are matched off against each other.

The ASX algorithm to set the opening auction

Basically, an algorithm is used to determine the volume on the buy side versus the volume on the sell side, as well as the prices at which they have been placed. This algorithm results in an official ‘auction’ price, which is the price at which the stock opens.

The algorithm is obviously only applied when an even or overlapping market exists, as when all buy orders are lower than all sell orders, there is yet to be an opening price; that will only occur when a buyer lifts their price to meet a seller, or a seller lowers their price to meet a buyer, at which point a trade is executed and an opening price is generated.

Matching ASX orders on the open

So with an overlapping market, all buy orders that had been submitted above the auction price will have traded, just as all sell orders that had been submitted below the auction price will have traded.

Buy orders below the auction price and sell orders above the auction price will be sitting in the market still, not having yet traded at the prevailing market price.

Let’s use Telstra (TLS) as an example. On the 22^ndof March, 2017, Telstra closed at $4.55. Between 7:00am – 10:00am AEST on the 23^rdof March, you would be able to submit your buy or sell orders on TLS. If a trader enters an order to buy 1000 TLS at $4.60, and the auction price ends up being $4.51, that trader will have purchased the stock at $4.51 on the opening auction. However, if the trader had entered their order to buy 1000 TLS at $4.50, their order will still be sitting in the screen unfulfilled, trading 1c below the prevailing market price.