How the Australian sharemarket works

This part of the site explains how the sharemarket functions.

Understanding how the market works can be as important a part of a trading strategy as an opinion about whether a security is going to increase or decrease in value.

For instance, the market goes through a number of different phases each trading day. How trading takes place is determined by the current market phase; the way opening prices are calculated determines which orders will be filled on open and at what prices; a number of different factors determine the life-span of an order.

Understanding the ASX sharemarket mechanism will explain some of the events you may have noticed, for example, why the opening price is occasionally some distance away from the market just ten minutes after trading begins, why your order has been cancelled or why your order was only partly filled, even though your instructions were to buy or sell at market. It may even help you decide when to trade and what price to place on an order.