7/3/2026 at 1:32:25 PM
> At one time, the stock market was closed at night and yet market indices often changed dramatically, even without a single share being traded. A hundred years ago, the Dow might close one day at 243 and open the following morning at 227, reflecting bearish overnight news. In that case, it is fairly obvious that the market moves on new information, not trading activity. To the extent that trading activity has any impact on prices, it is due to what the trading reveals about information held by various participants in the market.Markets open using an auction: before the market opens, a bunch of bidders declare the price/qty they’re willing to buy at, a bunch of sellers declare the price/qty they’re willing to sell at, and at the moment the market opens, a single multi-party transaction happens immediately at the implied market clearing price. That transaction is special: it’s not attributed to any particular buyer or seller in transaction data feeds, and typically has a tick volume 1000x (or more) higher than the median tick volume during trading hours.
It may appear that markets are opening at different levels merely on new information, and new information absolutely affects it, and that market jump may not appear to move like the typical brownish motion of active markets… but that opening price is nonetheless the result of buying and selling.
by darksaints
7/3/2026 at 5:30:30 PM
OK, but the bids and asks that are established in this closed-over-night market are themselves based on something. And since trading activity is not going on, they are not based on trading activity. I think that's the article author's point, which seems to make sense.It doesn't prove that trading is not (also) based on trading activity when the market is not closed.
by kazinator
7/3/2026 at 2:09:23 PM
Do you mean traders set up buy or sell orders and they get matched when market opens? That's... Just how markets work normally?by curtisblaine
7/3/2026 at 3:01:33 PM
Yes and no. There's a distinct auction that runs and it is a distinct event and has its own rules. Eg 5 mins (idr exactly, it's been 6 years for me) before the opening cross you can no longer cancel auction orders, post-only. At the open, they run an opening match of all the auction orders, THEN normal trading begins.by atomicnumber3