How is the opening price decided for a particular stock, on the stock market?
As I understand, the price movements during the day are a result of how much people are willing to pay for the stock.
However, there is often a significant amount of price movement at the opening. e.g. The price of a stock may open 2% lower than its closing price on the previous day.
Who decides what price the stock opens at?
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Answer by David
Use Investopedia.com or Wikipedia.com to define financial terms:
http://www.investopedia.com/terms/o/openingprice.asp#axzz1vhgWb8MI
Definition of 'Opening Price'
The price at which a security first trades upon the opening of an exchange on a given trading day. A securities opening price is an important marker for that day's tarding activity, especially for those interested in measuring short-term results, such as day-traders. Additionally, for securities which experience very large intra-day gains and losses will have those swings measured relative to their opening price for the day.
Investopedia explains 'Opening Price'
Quite commonly, a security's opening price will not be identical to its closing price. This is due to after-hours trading and to changes in investor valuations or expectations of the security occurring outside of trading hours. The opening price of a security serves as a benchmark for the day: if the security finishes trading at a higher price it is said to have closed up, and if it finishes trading below the opening price it is said to have closed down.
Read more: http://www.investopedia.com/terms/o/openingprice.asp#ixzz1vi025plO
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