Dec 11 2008, 02:20 PM
QUOTE(skiddtrader @ Dec 1 2008, 06:49 PM)
Just want to add something here so people won't miss the discussion in the stock market thread.
The introduction of the Theoretical Closing Price (TCP) in the last 10 minutes of trading for both sessions of the day might confused some investors and traders. But it's quite simple if you ignore all the jargons. Not to mention the introduction of TOP or theoretical opening price.
Basically not much changed in the way you do your trading.
You set up a buy order at a price you want, if someone is willing to sell to you, it gets matched and the transaction is done.
Same with Sell orders, you set up a Sell order at the price you want, if someone is willing to buy from you, it gets matched.
You can set up and change buy and sell orders anytime during trading sessions can cancel anytime as long as it is not yet matched. So this is the same like last time, no changes here.
Trading time is still 9am to 12:30 pm for morning session and 2:30pm to 5pm for afternoon sessions. Nothing changed for trading time.
Pre-opening time has changed though, this is when the market is not opened yet but you can start setting up your orders in Buy/Sell queues, moifying and canceling . Pre-opening is now 30 minutes earlier compared to 15 minutes before I think.
What is Theoretical Opening Price (TOP) ?
TOP is just a fancy word they use to determine what is the opening price for every session. Now a lot of people including me used to think that today's opening price for a counter should be yesterday's closing price. That's actually not true. Opening price has always depended on the queues of both Buy/Sell orders.
Yesterday's closing price is normally seen as a Reference Price or Ref. Price, and does not affect today's opening price other than to give people some sense how the counter was valued in the last session. People who read candle stick charts will notice this often where opening prices are often not the same level as previous closing prices.
Basically, TOP is the price determined by a automatic calculation of the Pre-Opening queues of Buy/Sell orders. The prices where the most volume will be done when the market opens will be the Theoretical Opening Price or TOP.
To be honest, TOP is not important because if you watch the stock market often, opening price has no bearing how the counter will move. But it does show how a LOT of people feel (before market opens) is the right price for a particular counter.
What is Theoretical Closing Price (TCP) ?
Now this is more important of the 2 new acronyms. Basically TCP is the price you will Buy or Sell in the last 10 minutes of each session. TCPs are determined by the 5 minutes prior to the last 10 minutes of trading.
Example:
Morning session trade is 9am to 12:30pm.
Last 10 minutes of trade is 12:20 to 12:30pm
TCP is determined or calculated from 12:15 to 12:20pm or 5 minutes prior to the last 10 minutes.
During this 5 minutes, NO transactions are done. But you can still set up orders, modify or cancel them as you deem fit.
During this 5 minutes, a tug of war is happening between buyers and sellers of a particular counter which you can watch LIVE like football.
As more sellers and buyers set up queues, the TCP is calculated continuously for 5 minutes.
The price where the MOST transactions can be possibly matched at the very last second of 12:19pm for that counter, will be the TCP from 12:20pm onwards.
The moment the clock strikes 12:20pm, trading is resumed and transactions are done, BUT only at the Theoretical Closing Price or TCP.
If you want to Buy/Sell during the last 10 minutes of the session, you can only Buy/Sell at the fixed TCP.
TCP will lasts until the session ends. A new TCP will be calculated for the next session a the same time which is 5 minutes prior to the last 10 minutes of trading.
Important Points
During TCP calculations, NO transactions are done. For 5 minutes, Buy/Sell queue orders will blink and rise and fall but NONE will be matched and transacted.
There is NO restriction on what you want to queue or cancel during the 5 minutes.
When the TCP is determined, NO other prices are entertained. Whether is cheaper or more expensive, once the TCP is fixed, thats the price you trade.
Very good explanation! The introduction of the Theoretical Closing Price (TCP) in the last 10 minutes of trading for both sessions of the day might confused some investors and traders. But it's quite simple if you ignore all the jargons. Not to mention the introduction of TOP or theoretical opening price.
Basically not much changed in the way you do your trading.
You set up a buy order at a price you want, if someone is willing to sell to you, it gets matched and the transaction is done.
Same with Sell orders, you set up a Sell order at the price you want, if someone is willing to buy from you, it gets matched.
You can set up and change buy and sell orders anytime during trading sessions can cancel anytime as long as it is not yet matched. So this is the same like last time, no changes here.
Trading time is still 9am to 12:30 pm for morning session and 2:30pm to 5pm for afternoon sessions. Nothing changed for trading time.
Pre-opening time has changed though, this is when the market is not opened yet but you can start setting up your orders in Buy/Sell queues, moifying and canceling . Pre-opening is now 30 minutes earlier compared to 15 minutes before I think.
What is Theoretical Opening Price (TOP) ?
TOP is just a fancy word they use to determine what is the opening price for every session. Now a lot of people including me used to think that today's opening price for a counter should be yesterday's closing price. That's actually not true. Opening price has always depended on the queues of both Buy/Sell orders.
Yesterday's closing price is normally seen as a Reference Price or Ref. Price, and does not affect today's opening price other than to give people some sense how the counter was valued in the last session. People who read candle stick charts will notice this often where opening prices are often not the same level as previous closing prices.
Basically, TOP is the price determined by a automatic calculation of the Pre-Opening queues of Buy/Sell orders. The prices where the most volume will be done when the market opens will be the Theoretical Opening Price or TOP.
To be honest, TOP is not important because if you watch the stock market often, opening price has no bearing how the counter will move. But it does show how a LOT of people feel (before market opens) is the right price for a particular counter.
What is Theoretical Closing Price (TCP) ?
Now this is more important of the 2 new acronyms. Basically TCP is the price you will Buy or Sell in the last 10 minutes of each session. TCPs are determined by the 5 minutes prior to the last 10 minutes of trading.
Example:
Morning session trade is 9am to 12:30pm.
Last 10 minutes of trade is 12:20 to 12:30pm
TCP is determined or calculated from 12:15 to 12:20pm or 5 minutes prior to the last 10 minutes.
During this 5 minutes, NO transactions are done. But you can still set up orders, modify or cancel them as you deem fit.
During this 5 minutes, a tug of war is happening between buyers and sellers of a particular counter which you can watch LIVE like football.
As more sellers and buyers set up queues, the TCP is calculated continuously for 5 minutes.
The price where the MOST transactions can be possibly matched at the very last second of 12:19pm for that counter, will be the TCP from 12:20pm onwards.
The moment the clock strikes 12:20pm, trading is resumed and transactions are done, BUT only at the Theoretical Closing Price or TCP.
If you want to Buy/Sell during the last 10 minutes of the session, you can only Buy/Sell at the fixed TCP.
TCP will lasts until the session ends. A new TCP will be calculated for the next session a the same time which is 5 minutes prior to the last 10 minutes of trading.
Important Points
During TCP calculations, NO transactions are done. For 5 minutes, Buy/Sell queue orders will blink and rise and fall but NONE will be matched and transacted.
There is NO restriction on what you want to queue or cancel during the 5 minutes.
When the TCP is determined, NO other prices are entertained. Whether is cheaper or more expensive, once the TCP is fixed, thats the price you trade.
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