Why do the stocks on the market tank every morning?

It doesn't always work. If the market was offering premium prices the week prior, it's only reasonable that Monday should see it drop to discount prices.

Vice versa, a market that was offered discount prices the week before Monday, would usually see it go up to premium levels.

So always note what market profile was in play going into a new week.

Many traders do BTST; therefore, when they close their position, stocks do down marginally.

BTST is when you buy shares, and you have to wait for them to be delivered into your account before you sell them. It takes two trading sessions for the delivery to appear in your account. So if the stocks move up the very next day, then you cant sell them.

Therefore day traders quickly buy and sell stocks in the morning, creating pressure on stocks. In addition, negative news and participation of short-sellers can also cause it to fall.

Of course, I am not an absolute expert on the individual processes on the stock exchange, but I have a certain idea why the share prices are only released at a certain time.

I think ultimately it is to give stock traders the opportunity to gather various information about the respective companies and then start trading at the beginning of the week. I personally like to compare this with a horse or dog race where the players also gather information about their favourites before they decide to place their bets. And just like a betting race, the stock market starts at a certain fixed time.

Realistically, however, as far as I know, it is rather historically conditioned and probably has more to do with the historical commodity exchanges from the 18th and 19th centuries. At that time, these financial and trading centres were subject to much stricter regulation and some things have certainly been taken over from then.

The pre-market performance is an important function to understand at what prices the stocks will be opening that day. However, it is not an indication of which direction the broader financial market will trade in throughout the rest of the session.

There have been many sessions, especially in 2021, where the market is down 400 points in pre-market. Still, then there is a 600-point swing, and the Dow Jones Industrial Average finishes in positive territory.

Whatever you do, use a limit order on your shares purchased or sold outside of trading hours!

That said, the stock market is on edge right now, with most of the focus on inflation and possible Federal Reserve tapering. Investors have moved on from the coronavirus pandemic, and their optimism over the recovery and reopening is being weighed down by what is happening on the inflation front.