What is auction trading?
To ensure price stability and a fair and transparent trading environment at the opening and closing times, exchanges usually conduct "opening auction" and "closing auction" during specific periods before the start and end of the formal trading period to determine the opening and closing prices of the day through the process of collecting bids and determining prices based on the orders submitted by both buyers and sellers with the use of specific algorithms for maximizing trading volume.
During the auction period, buy and sell orders submitted by investors will not be immediately executed, and the exchange will find a unified price for transaction based on the orders submitted by both buyers and sellers using specific algorithms to maximize trading volume. This "unified price" becomes the opening or closing price of the day.
With the auction data (NOII, Net Order Imbalance Indicator), you can quickly understand the reference price, matched and unmatched shares during Nasdaq's auction period.
US stock bidding trading time
Opening auction time:
Eastern Time: 09:25 - 09:30
Hong Kong Time: 21:25 - 21:30 (Daylight saving time) or 22:25 - 22:30 (Standard time)
Closing Auction time:
Eastern Time: 15:50 - 16:00
Hong Kong Time: 03:50 - 04:00 (Daylight saving time) or 04:50 - 05:00 (Standard time)
How to analyze auction trends
Method 1: Predict opening trends with unmatched shares
If the number of unmatched shares is positive and greatly exceeds the absolute value, it means that the quantity of buy orders is much higher than that of sell orders, indicating high demand for the stock, which may indicate that the stock price will rise after opening. If the number of unmatched shares is a large negative absolute value, it means that the quantity of sell orders is much higher than that of buy orders, indicating that the stock price may fall after opening.
Method 2: IPO bidding analysis
On the first day of the new listing of US stocks, there is no direct trading, but an auction period. During the auction period on the first day of the new stock listing, investors can understand the transaction intentions of both sides and make buying and selling decisions based on the reference price and matching situation of the opening auction to determine the opening performance of the new stock.
Method 3: Seize the last trading opportunity with the closing reference price
At the end of each trading day, investors can execute the last transaction using the reference price of the closing auction.
