Consider the situation I want to buy shares of a company. Further, consider that the share price was at
x when the market closed at the end of the day. Now during the market closure, I place a limit order with the value
x. For simplicity sake, we are only looking at one market. That there several stock exchanges all over the world shall be omitted.
My question is now, what happens when the market opens the next day. there are three scenarios for the new share price
y I can think of
From my understanding, my limit order is run/executed in any case since I made a limit order at
x, and the share price must be a continuous function. The cases
y<x at the instance of market opening can not occur since that would mean that the value can be arbitrary at market opening.
People try to explain that this is a common occurrence, and the price might drop or skyrocket overnight. I do understand that exceptional circumstances like a server breakdown or a whole company disappearing might cause that. But when all infrastructure works, how can that be?
I am baffled by how this works. Maybe I also need to review how the stock market works. Are there also some material that explains my situation.
Thank you all for the hints. I was wrong assuming that
share price must be a continuous function. I looked to reference up and now I learnt something, I will leave the questions as is so that other can learn from my wrong assumptions.
@RockPaperLz- Mask it or Casket: you are the first one to notice my username. And it checks out. haha