Why You Should NOT Judge the Market in the Early Morning Hours (NSE)

Understanding the Fake Signals, Old Orders, Market Orders, and Probing Trades That Distort the First Hour

The first hour of trading at the Nairobi Securities Exchange (NSE) is the most misunderstood period by new investors. Prices can move sharply, gaps can appear, and some stocks may look extremely weak or unusually strong.



But here’s the truth:

👉 Most of these early movements are NOT real market direction.
👉 They are system clean-ups, old orders, probing orders, and market orders hitting shallow liquidity.

Let’s break it down clearly with examples.

Overnight & Old Orders Are Being Cleared (GTD Orders)

Many investors place GTD (Good Till Date) orders but forget to cancel when they fail to execute. These old orders remain in the system.

When the market opens:

  • The system matches yesterday’s unexecuted buy/sell orders if prices match.
  • Some were placed at unrealistic prices.
  • Some traders forgot they were still active.

This creates false spikes or false dips before real traders even act.

Example: Safaricom (SCOM)

Yesterday, someone had a GTD sell order at KES 12.00 that didn’t execute. When the market opens:

  • Early bids appear with market orders
  • The system automatically matches the old 12.00 sell order

This makes Safaricom look like it opened weak or strong — yet:

❌ No real selling pressure
❌ No new supply
❌ Not today’s sentiment

It was simply yesterday’s leftover order polluting today’s open.

Market Orders Can Distort Prices Dramatically

Market orders = “Buy or sell at ANY available price.”

In a shallow market (like NSE), one big market order can:

  • Hit all the best bids/offers instantly
  • Create an artificial gap
  • Make a stock look bullish or bearish before real activity starts

Example: How a Market Sell Order Creates a Fake Dip

Safaricom has:

  • Bid: 12.10
  • Bid: 12.00
  • Bid: 11.90
  • Bid: 11.70

Someone loads a large market sell at the open. The system clears all bids until the order fills.

This can make the price look like it “crashed,” even though:

  • It was one person selling
  • No real trend
  • No volume confirmation
  • Buyers hadn’t populated the book yet

Market orders create fake volatility in the opening window.

Serious Investors Do NOT Rush Into the First Minutes

Professionals use the early period to observe:

  • Bid/Ask spreads
  • Price gaps from yesterday
  • Market depth
  • Volume profile
  • Book pressure (supply vs demand)

They wait for confirmation — not noise.

Early Price Movements Are Usually “Tests,” Not Trends

Professionals sometimes place probe orders:

  • ✔️ Low bids → test weak sellers
  • ✔️ High offers → test aggressive buyers

These tests reveal:

  • Market mood
  • Liquidity
  • Trader aggressiveness
  • Weak hands

These movements are NOT the day’s trend — only information-gathering tactics.

The “Chaos Window” Is Where Opportunities Are Born

Smart investors exploit mispricing caused by:

  • Old GTD orders
  • Market orders
  • Thin morning spreads
  • Emotional amateurs
  • Probe orders

🔹 If bids open abnormally low → BUY the discount.
🔹 If offers are unusually thin → SELL into early strength.

This hour is gold for experienced traders, but confusing for beginners.

True Trend Forms AFTER the Noise Settles

By the 2nd hour:

  • Old orders are gone
  • Market orders absorbed
  • Real buyers & sellers show up
  • Volume normalizes
  • Spreads tighten
  • Price stabilizes

Only then can you judge:

  • Bullish?
  • Bearish?
  • Sideways?

The real trend emerges after the cleanup phase.

Example: Why You Shouldn’t Panic Early (Safaricom)

At 9:30am, Safaricom shows:

📉 “Opened at 12.00”
📉 “Weak in early session”

But in reality:

  • Old GTD order was matched
  • Large market sell cleared thin bids
  • Buyers were still loading the book

By 11:00am:

  • Bids rise to 12.15
  • Offers tighten to 12.20
  • Real buying appears
  • Trend stabilizes or reverses

The early “weakness” was fake.

The Opening Hour Is NOT Reality — It’s Noise

New investors panic.
Experienced investors observe.
Professionals exploit.

The opening hour is for watching — not judging.

Only after:

  • ✔️ Old orders clear
  • ✔️ Market orders settle
  • ✔️ Real liquidity appears
  • ✔️ Volume builds

…can you make informed decisions.

If you want long-term success at the NSE:

👉 Stop judging the market in the first 1 hour.
👉 Wait for real signals, not system noise.
👉 Trade with strategy, not emotion.

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