How is opening price determined

Market liquidity gives investors the confidence to make investments with the assurance that—should they need to sell—they can do so quickly. It also presents opportunity. With highly liquid markets populated by active buyers and sellers, investors have plenty of opportunity to move in and out of the markets both quickly and easily in pursuit of profits. Securities and Exchange Commission. Accessed Oct.

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We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. I had customized a simple table for easy explanation. Here, you can notice that there are different quantities of demand and supply of stock for different share prices based on the buy and sell order placed.

The opening price is determined based on the principle of demand and supply mechanism. It occurs at the equilibrium price, where the maximum volume tradable quantity is executable. In the above example, the maximum tradable quality was possible at a share price of Rs Hence, Rs will act as the opening price for the share. All the outstanding orders, which are not executed in the pre-opening session, will move to the normal market session.

Quick Note: The above table is created in a simple way to let you understand the basics. However, in real-time scenarios, there will be tons of volume of buy and sell orders, making it quite complicated. The equilibrium price determined in the pre-open session is determined as the opening price for the share.

If you have any doubts, feel free to comment below. Also read: How to Invest in Share Market? And so, I am delighted to share my learnings with you.

Sir one broker suggests me see LTP and match them with opening price after watching data of company for 3 months if opening price is higher then LTP then u buy that stock. Hi Kiran. If you want to make consistent money from stocks, then you need a strong strategy, not some one-time trick!! Your order will be executed successfully at with no change to the opening price of the stock.

You can reach me out over email at kritesh tradebrains. As we know that it is demand and supply. And lets us is the normal price…opening price started with So how that 8 rupees increased? On what basis that was decided? Any calculation? Demand would be more than the supply but how its calculated? Is that possible? Your email address will not be published. Profitability, Growth, Valuation, Liquidity, and many more filters.

Start your stock analysis journey with Trade Brains Portal today. Once a pattern of orders emerged, the opening occurred according to normal procedures. Your email address will not be published. Save my name, email, and website in this browser for the next time I comment. First, each posts a single bid and asked price pair. This price can signal each firms view of the security, its current desire to buy or sell, or it may indicate that a firm is out of calibration with others in the market.