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What is the Opening Price?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 01 December 2016
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With investing, the opening price is the current selling price for a security at the time that the exchange opens each trading day. For new stock offerings, the term refers to the initial price per share that is in effect at the beginning of the first day that the new stock is offered for sale on the open market. In some situations, the opening price will also be the price that is established by the first trade of the day, rather than being based on a figure that was already in place when the exchange opened that morning.

There are a number of factors that can influence the opening price of a given security. One of those factors has to do with the rate at which the stock closed the previous day. Depending on the amount of orders or trades that were prepared for execution while the market was closed, that market close price may also be the market open price the next day. However, situations where sudden changes occur in the interim, such as unanticipated changes in the structure of the company issuing the stock, political upheavals, or natural disasters, may drive the value of the security up or down. When this is the case, the market may take those events into consideration and assign an opening price that is very different from the closing price of the previous day.

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In situations where no opening price is designated prior to the market opening for the day, the matter is quickly settled when the first trading activity takes place. With this scenario, the price per share that is paid for the first buying or selling activity involving the security also acts as the opening price. This figure establishes the starting point for the trading day and will be used to measure the upward or downward movement of the security during the course of the day.

Investors often seek to anticipate the opening price for a given stock, as a means of identifying the right time to buy and sell shares. For example, investors may be aware of events that will drive the value of a stock downward temporarily, with the downward movement expected to culminate at the beginning of a specific trading day. The investor will then move to purchase shares while the stock is at its lowest point, then sit back and watch the value of the shares steadily increase as the security recovers from the temporary downturn.

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Bertie68
Post 5

@Esther11 - Yes, it certainly is different. You can get an account with an online brokerage company. You don't have to have a broker, you just put in your own orders and pay just a reasonable fee for each buy or sell.

If you don't hire a broker, you have to do your own homework. You can usually figure out what the opening price will be by looking at the closing price the day before and how the pre-opening buy and sell orders are lining up.

But sometimes everyone, including the "market" is surprised by some twist of events.

Esther11
Post 4

Things were really different when buying and selling stocks before the internet. I remember my dad reading the stock market page in the newspaper. He got information by reading material mailed to him about the market and different companies, or talking to friends.

Trading went a lot slower. You needed to call your stock broker to put in orders and get advice.

Sometimes my dad went into the broker's office to do trades. Does anyone make trades on the internet. Bet it's a lot different!

golf07
Post 3

I watch the stock market on a daily basis and always pay close attention to the opening and closing price of the three major stock indexes.

This can give me a good indication of what is happening in the overall market. If there are big gaps between the opening price and closing price, you know that something is up and it might be a fairly active day.

There are also many charting patterns that rely on using the opening and closing prices of the stocks. Some patterns will also take in to consideration the high and low of the day, but a very clean chart pattern will show the open and closing prices at a minimum.

Mykol
Post 2

I enjoy watching the fluctuations in the opening price of new stock offerings. These can also be quite lucrative to trade, but it is not for the faint of heart.

There can be some pretty wild swings during the first few hours of a new stock that begins trading. Some people like to get in and make a few quick dollars and get out as soon as possible with their money.

There have been times that I have been glad I have done this, as the stock ended up closing even lower than it opened. When that happens, and you haven't sold, you just hope you can get make up that loss in the next day or so.

julies
Post 1

I have traded stocks for many years, but this has always been done with the help of the internet.

My dad is the one who taught me about stocks, and I remember when he would look at the opening and closing prices of stocks in the newspaper every day.

Although this was beneficial, it is nothing like the information the internet can give you at any time of the day.

If there has been some positive or negative after market activity in a particular stock you are watching, you will be able to know before the market even opens.

These pre opening stock prices can make a big difference in your decision to buy, sell or hold on to the stock if you currently own it.

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