What is Pre Open Session in Share Market

Are you curious about what happens in the share market before regular trading begins? The pre-open session is a crucial period where investors can place their orders before the market officially opens. This article will delve into the intricacies of pre-open sessions in the share market, explaining how they function and why they are essential for traders and investors.

In the world of finance, the pre-open session refers to a brief period before the regular trading session begins, allowing market participants to enter their orders. During this time, orders are collected, and an equilibrium price is calculated based on the buy and sell orders. This helps in determining the opening price for the market once trading officially commences.

The pre-open session typically lasts for 15 minutes, divided into three equal periods. The first 8 minutes are reserved for order entry, followed by a 4-minute order matching period, and finally, a 3-minute buffer period to facilitate a smooth transition into the regular trading session.

The primary purpose of the pre-open session is to reduce volatility and ensure a fair opening price for all market participants. By allowing orders to be entered and processed before the market opens, the session helps in avoiding sudden price fluctuations at the beginning of the trading day.

One of the key benefits of the pre-open session is price discovery. It enables investors to gauge market sentiment and liquidity levels before placing their orders, thus making more informed trading decisions. Additionally, the session provides an opportunity for large orders to be matched without significantly impacting the market price.

For traders and investors, understanding the dynamics of the pre-open session is crucial for developing effective trading strategies. By analyzing the order flow and price trends during this period, market participants can anticipate potential market movements and position themselves accordingly.

In conclusion, the pre-open session plays a vital role in the functioning of the share market by allowing for an orderly and efficient opening of trading. By providing a transparent and controlled environment for order entry and price discovery, the session contributes to the overall stability and integrity of the market. Next time you participate in the share market, keep an eye on the pre-open session to gain valuable insights into market dynamics.