The 15 minutes session which starts before the actual market begins is known as the pre-opening market session. It is from 9 a.m. to 9:15 a.m.
Earlier what used to happen is at 9.15 a.m. a huge amount of orders are placed because people would think that today this and this is going to happen. So they continuously used to buy this and sell that. This used to cause enormous fluctuations in the market within 15 minutes.
Suppose, a stock was at Rs.30000, it is used to rise 3% that is 900 points and immediately falls. This caused small investors to suffer losses. So to avoid this loss a new segment was introduced called as pre-opening market session
Q) Are the orders placed in the pre-opening market session executed?
A) No, the order will only get executed when the market starts i.e (at 9.00 am) but here what they do is they just watch the price movement i.e (how much buy and sell orders are being placed).
Even within these 15 minutes, stock exchanges have broken it down into three parts.
9 a.m. – 9.07 a.m. – Orders are being placed
9.08 a.m. – 9.11 a.m. – Order matching i.e how many people are buying and how many people are selling. So, the market electronic system matches the order.
9:12 a.m. – 9:15 a.m. – Here, the exchanges see where the trend is going either upward or downward.
The orders placed within these 15 minutes are called as Pre Market Orders.