Opening Prices

[stooriepops]

Hi there,

Stupid question coming up

When the LSE closes and other markets are still open, do the prices of stocks on the LSE still fluctuate? I don't think this can be the case as there is no buying and selling but why does a stock start out with a low opening price? Is it that the stock always starts with the closing price but can immediately move as there is a flurry of activity first thing?

TIA

 

[ChartMan]

There is what is called the closing auction where all sorts of trickery goes on to "balance" the books. Try searching on the LSE web page for more info.
Low opening prices a wide bid offer spreads( if that's what you mean) is where the market makers earn their Ferraris. Hiking the price up at the open tricks the unwary into thinking the stock is going up, and dropping it may fool people into a kneejerk sell reaction. The rule of thumb is wait at least til 8:30 before deciding if a price is "real" or imaginary .

 

[stooriepops]

Thanks for that Chartman, I'll check out the LSE web page. Interesting stuff indeed!

 

[razorgirl]

Yes, 8.30 is a lovely time for putting a trade on in the opposite direction when the opening price has overshot