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The screenshot of 'BABA'

There are very detailed curves for after hours trading / pre market trading. How are they created? What is the data source?

Thanks for any detailed explanation.

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Graphs are nothing but a representation of data. Every time a trade is made, a point is plotted on the graph. After points are plotted, they are joined in order to represent the data in a graphical format.

Think about it this way.

1.) Walmart shuts at 12 AM.

2.)Walmart is selling almonds at $10 a pound.

3.) Walmart says that the price is going to reduce to $9 effective tomorrow.

4.) You are inside the store buying almonds at 11:59 PM.

5.) Till you make your way up to the counter, it is already 12:01 AM, so the store is technically shut.

6.) However, they allow you to purchase the almonds since you were already in there.

7.) You purchase the almonds at $9 since the day has changed.

8.) So you have made a trade and it will reflect as a point on the graph.

9.) When those points are joined, the curves on the graph will be created.

10.) The data source is Walmart's system as it reflects the sale to you. ( In your case the NYSE exchange records this trade made).

Buying a stock is just like buying almonds. There has to be a buyer. There has to be a seller. There has to be a price to which both agree. As soon as all these conditions are met, and the trade is made, it is reflected on the graph. The only difference between the graphs from 9 AM-4 PM, and 4 PM-9 AM is the time. The trade has happened regardless and NYSE(Or any other stock exchange) has recorded it! The graph is just made from that data.

Cheers.

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the data source is the same as the live market trading. pre and after market trading are active markets and there are actual buyers and sellers getting their orders matched.

  • So pre/after markets are actual trades but not some 'estimation' or 'un-executed orders', right? – AGamePlayer Sep 22 '14 at 15:14
  • they are actual trades. it is not a reliable indication of what will happen throughout the normal market hours. – CQM Sep 22 '14 at 15:17
  • I see. Just wondering, is there any god post/article discussing pre/after markets? Thanks! – AGamePlayer Sep 23 '14 at 4:54

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