Opening Auction
Market Microstructure glossary · Market Microstructure Fundamentals
Definition
A call auction conducted at the beginning of the trading day to establish an opening price that reflects overnight information.
Opening Auction in plain English
Overnight, while the market is closed, tons of news can hit — earnings reports, world events — but nobody can trade on it yet. The opening auction is a special one-time gathering at the start of the day where everyone submits the orders they want, and instead of matching them one-by-one, the exchange finds the SINGLE price that lets the most shares trade at once. That price becomes the day's opening price, cleanly reflecting all the overnight news at the same moment. It's like everyone shouting their offers into one room, then the auctioneer picking the price where the most buyers and sellers can shake hands.
Learn these first
Practice Opening Auction
Related Market Microstructure terms
Market Microstructure practice questions · Market Microstructure flashcards · Market Microstructure study guide