3 ms·

If you read the actual article, what they speak about is not drops that happen in the middle of the day or something, but drops that were very expected as the f

If you read the actual article, what they speak about is not drops that happen in the middle of the day or something, but drops that were very expected as the futures-market for these stocks has dropped before even opened. That is, closes due to drops that happen during opening minutes isn't helpful for anyone.

whatshisface 7y ago
If the perceived value of the stock has fallen overnight and the futures market reflects that, won't the price instantly and automatically update to reflect that during the opening auction?
- vzidex 7y ago
  > won't the price instantly and automatically update to reflect that during the opening auction? Yes, this is what is referred to as a "gap down" - it produces what is almost a discontinuity in the graph of the price. This is also why the opening price for an asset is often different than its closing price from the previous day.
- gbear605 7y ago
  It does, which is what happened today, and once (or twice? I can’t remember now, which is a bad sign...) in the last couple of weeks. The circuit breaker still breaks, it just breaks with the price down 8% or whatever.
- Bedon292 7y ago
  I think so, yes. But I imagine at least part of what happens is people have stop losses in place, which trigger instantly at the opening bell due to the new lower price, plummeting the prices more. Since they would not trigger after hours. But I am actually curious what is happening, where is most of this volume coming from? I can't imagine people had chances to make any decisions in the 1 second between opening and halt. Which I think is the purpose of the pauses, right? Giving humans a chance to make decisions instead of the algorithms?
  - XorNot 7y ago
    > Giving humans a chance to make decisions instead of the algorithms? Exactly this. 20 minutes is enough time for people to make phone calls, check code pushes, check that the books look like what they expect.

whatshisface 7y ago

If the perceived value of the stock has fallen overnight and the futures market reflects that, won't the price instantly and automatically update to reflect that during the opening auction?

vzidex 7y ago
> won't the price instantly and automatically update to reflect that during the opening auction? Yes, this is what is referred to as a "gap down" - it produces what is almost a discontinuity in the graph of the price. This is also why the opening price for an asset is often different than its closing price from the previous day.
gbear605 7y ago
It does, which is what happened today, and once (or twice? I can’t remember now, which is a bad sign...) in the last couple of weeks. The circuit breaker still breaks, it just breaks with the price down 8% or whatever.
Bedon292 7y ago
I think so, yes. But I imagine at least part of what happens is people have stop losses in place, which trigger instantly at the opening bell due to the new lower price, plummeting the prices more. Since they would not trigger after hours. But I am actually curious what is happening, where is most of this volume coming from? I can't imagine people had chances to make any decisions in the 1 second between opening and halt. Which I think is the purpose of the pauses, right? Giving humans a chance to make decisions instead of the algorithms?
- XorNot 7y ago
  > Giving humans a chance to make decisions instead of the algorithms? Exactly this. 20 minutes is enough time for people to make phone calls, check code pushes, check that the books look like what they expect.