Investing term
What is Opening auction?
A single pre-market batch where pent-up orders accumulate and then cross to set the day's opening price.
An opening auction is a single batched event at the start of the trading day where all the orders that built up overnight are matched at once to set the opening price. Instead of trading trickling in, the exchange crosses supply and demand in one cross, which is why opening prices can gap sharply from the prior close after big overnight news.
For example
Heavy buy orders pile up overnight after good news; the opening auction matches them all at once, setting a price well above yesterday's close.
Opening auction is taught hands-on in Stage 5 — How Markets Work Globally.
See the lesson →