Market-On-Open Order (MOO)
Categories: Trading
A market order simply means that a trader wants to buy a stock at whatever the current retail price is for that stock.
Google a stock price...the number you see provides the market price. That figure represents the culmination of all the bids and asks that take place under the surface.
Put in a market order and you aren't specifying a price you want to target (targeting a specific price is called a "limit order"). You'll just take whatever it's selling for.
Meanwhile, the "On-Open" part here refers to the open of the market. You know that morning bell they sometimes ring on TV? That's the open. Because yeah...as much Red Bull and ephedrine a stock trader can ingest, they have to sleep sometimes.
So the New York stock markets close at 4 pm EST each work day, and open up again at 9:30 am EST the next work day. That 9:30 time marks the open.
Now, despite the pretense that the market is "closed," some trading takes place overnight. Robots, insomniacs, and people living in other time zones keep up a (relatively) thin trade in the after-market and pre-market periods.
Because of that extended-hours trading, the opening price for a given stock might not match the closing price recorded the day before.
A market-on-open order means that a trader will buy a set number of shares at whatever price the stock opens at on the next trading session. So, on Monday night, a trader might set a MOO to purchase 100 shares of a stock that closed the previous session at $50. The stock opens on $52...so the MOO order executes, buying the trader 100 shares at $52 a share...the market price at the open.
Related or Semi-related Video
Finance: What are At-the-Close Order and...24 Views
Finance a la shmoop.. What are at the close order and at the opening orders
Well simply put they're a way of buying and selling stocks and bonds and [Shmoop video on PC monitor]
they're really a hybrid form of a limit order only instead of limiting the order
of a hundred shares of Mickey D's at 45 bucks or better the "limit"
is time-based that is it is placed a minute or less from the close of the
market like 3:59 p.m. New York time or the open of the market like 9:31 a.m. New
York time got it so why would someone do this kind of limit order well if a [Man discussing limit order]
company that day before had printed what looked like a really good quarter but
upon deep inspection the investor who owned the shares thought otherwise and [Man inspecting company folder]
you know wanted to dump them well then that investor would want to take
advantage of a high opening print and just sell it whatever the price was a
minute or two after the open making the bet that the stock would then trade down
after bigger smarter better analysis was published on the stock itself and then
everyone else went to dump it - so what about an at the close order well kind
of inverse of the same thing here a company's quarter will be announced at [4:28pm shown on digital clock]
4:30 p.m. New York time tons of excitement leading up to it so
"everyone" wants to be long the stock ahead of earnings but you think
earnings will disappoint like you know buy the rumor sell the actual news kind
of vibe so you want to hold the stock until the last minute that day and then
you just give the guidance to sell the stock that last minute of trading or at [Investor sells stock to market]
the close and you're out and now we have arrived at the close of this video... Adios! [Man waving on stage]