I'm new to futures trading. I noticed that there are pre-open hours each day in the futures market. For example the pre-open begins at 17:45 for Crude Oil Financial Futures. What exactly is pre-open? Is it similar to the pre-market in stocks trading? Can orders be filled in the futures pre-open? Thanks.
Futures trade electronically 'round the clock except for the brief blackout periods after normal pit session hours end (for CL, the blackout is not immediately after the pit close, but for ES, YM ... the 1st of 2 blackouts is.) Check the exchange websites for exact times. You can trade (have orders fill) any time the e-market is open, basically 'round the clock from Sun. night 'til Friday afternoon's close.
I am sure people with greater understanding of the market can point to more details. My understanding is that during pre-market, you will have an imbalance of bids and offers. For different products, there are different algorithms matching the most bids with offers without moving the market beyond any triggers. On the equities side, that the job of the specialists. On the futures side, I believe the exchange implements that algorithmically. That matching determines the opening price for the new session. feedback/comments welcome
This is a great topic. My advice is to go on the relevant trading exchange's website and download the circular or exchange rule on the topic. The procedure can vary from exchange to exchange. And it truly is about balancing orders and each exchange's order matching algorithm. For example, you have GTC orders and you have MOO orders. You will actually see the price ladder shift around during the pre-open as more orders get entered ( or pulled ) and as the time for the official trading open gets closer. Some traders in the know actually game the system at times for advantageous fills... I know a few of them.