Understanding the Stock Market Terms "Open" and "Close"
- The stock market is where you can buy and sell stocks of publicly traded companies.
- Open is the first trading price of a stock on that day.
- Close is the trading price at the close of the stock market on the previous day.
The stock market is where you can buy and sell stocks of publicly traded companies. Unlike years ago, investing in the stock market today is much more accessible for the everyday person. You can now buy and sell stocks online, via mobile apps like Acorn or Robinhood, via a traditional brokerage account, or your employer's 401k plan.
The stock market is a risky investment choice because there is no guarantee that the stock you purchase will make money. Because of the risk, you should learn how to invest and understand the complexities of the stock market. Although the stock market can seem like a foreign place, don't be discouraged. We are here to help you learn and break down the needs-to-knows of the market.
Two standard terms of the stock market are Open and Close.
What does "open" mean in the stock market?
Open is the first trading price of a stock on that day. It's important to note that different stock exchanges in the United States (U.S.) and across the globe differ in their opening and closing times.
Two popular stock exchanges in the U.S. are the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation System (NASDAQ). There are other smaller stock exchanges in the U.S. like the Miami Stock Exchange (MS4X), Chicago Stock Exchange (CHX), and Philadelphia Stock Exchange (PHLX). Outside of the U.S., international stock exchanges are operating in countries such as China, London, and Tokyo.
Example: Nike Inc. (NKE)
The graphic displays the “Open” marker which indicates that the stock price for Nike Inc. (NKE) opened at $133.37. This means that the stock is available for investors to buy at the price of $133.37.
If you are trading on the New York Stock Exchange (NYSE), their operation hours are Monday through Friday from 9:30 a.m. ET to 4:00 p.m. ET. The NYSE is open almost all year during these trading hours. The NYSE also has two partial holidays where they are open from 9:30 a.m. to 1 p.m. on Black Friday (the day after Thanksgiving) and Christmas Eve. The stock market is closed on certain United States federal holidays like Christmas Day and New Year's Day.
What does "close" mean in the stock market?
Close is the trading price at the close of the stock market on the previous day. You may see the term Previous Close (sometimes abbreviated as prev. close), which means the previous day's stock price.
Example: Nike Inc. (NKE)
The graphic displays the “Prev close” marker which indicates that the stock price for Nike Inc. (NKE) closed on the previous day at $132.62.
For example, if a stock price is $400 at the end of trading hours, then the next day, you will see $400 next to the word close. The cost of a stock can fluctuate during the after-hours trading period, changing the stock price when the market opens again.
Although no one can consistently time the stock market, it's essential to understand when to withdraw and deposit your funds into the stock market because timing can also affect your monetary gains or losses.