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Markets closed, but prices change

Posted: Fri Jan 17, 2020 10:49 am
by PoppyA
How is it that stock prices can change from closing bell to opening bell?

Re: Markets closed, but prices change

Posted: Fri Jan 17, 2020 10:56 am
by jdilla1107
The simple answer is that the supply/demand changes between closing and opening. But, also realize that stocks (and derivatives) are actually trading 24/7 on generally lower liquidity. Money never sleeps.

Here is some info on after hours nasadq trading

https://www.nasdaq.com/market-activity/ ... ed-trading

Re: Markets closed, but prices change

Posted: Fri Jan 17, 2020 10:56 am
by CyclingDuo
PoppyA wrote: Fri Jan 17, 2020 10:49 am How is it that stock prices can change from closing bell to opening bell?
Because markets are open in what is known as pre-market and after-market hours.

Re: Markets closed, but prices change

Posted: Fri Jan 17, 2020 11:11 am
by ohai
They don't trade 24 hours - the exchanges will close for after hours trading at some time like 8pm and open some time after that. Futures trade for more hours, with some weird small breaks that I don't understand (like 5pm to 6pm).

Re: Markets closed, but prices change

Posted: Fri Jan 17, 2020 11:17 am
by firebirdparts
They even offer an "adjusted" price of record on the ex dividend date. This is because the dividend is paid to whoever owns the stock at a particular instant, and you'd have to only own the stock for an instant to receive all the dividend. Human nature requires us to arbitrage that, and folks do, and the exchange will provide that properly arbitraged number just for you to look at. This is the extreme case of the most obvious "new after hours information" and it's so obvious that the exchange actually gives it to you every time.

It's amazing to me that people actually trade all these individual stocks after hours. How did people ever get so motivated? I mean, I don't even invest in individual stocks when the exchange is open.

Re: Markets closed, but prices change

Posted: Fri Jan 17, 2020 11:25 am
by cjking
What a stock is worth is always potentially changing from one second to the next. Asking why the share price is different in the morning is like asking why a moving object is in a different place when you open your eyes after temporarily closing them. Just as closing your eyes doesn't stop objects moving, closing markets so they don't track the value of a stock doesn't stop the value changing.

Re: Markets closed, but prices change

Posted: Fri Jan 17, 2020 11:29 am
by Jack FFR1846
Shares traded at $20 at 4pm. So the closing price was $20. Overnight, something happens and everyone wants out of the stock. The exchange opens at 9:30 and there are no buy orders for $20. The highest buy order is for $10 and there are lots of sell orders that'll take $10. So the opening price is $10.

Re: Markets closed, but prices change

Posted: Fri Jan 17, 2020 12:08 pm
by TropikThunder
PoppyA wrote: Fri Jan 17, 2020 10:49 am How is it that stock prices can change from closing bell to opening bell?
There’s (at least) two ways you could mean this:
(1) the opening price at 9:30 am is different from the closing price at 4:00 pm the day before
(2) new prices appear overnight while the exchange is closed


Jack FFR1846 explains how (1) happens
Cycling Duo explains how (2) happens