Auction Market Theory

Overview

Auction Market Theory (AMT) describes markets as ongoing auctions in which participants discover prices and facilitate trade.

A balanced auction often rotates around a broadly accepted value area. An imbalanced auction may migrate as participants accept prices away from prior value.

Acceptance and rejection

Acceptance means the market continues to trade at new prices rather than immediately returning to prior value. Rejection suggests those prices did not attract sustained trade. Neither guarantees the next direction.

Using AMT in practice

Review the session profile, prior value, opening location, and whether the market builds volume above or below important reference levels. Consider risk before execution.