day opening price

[shar187]

Hi,

This is probably explained somewhere but I don't know what to search. Anyway, can someone in the know explain to me please how the opening price each day is calculated when there are sellers showing sell price lower than buyers buy price?

Not sure how well this will copy and paste but the below is an example from FNP for today before ASX opened. There are two buyers willing to buy 3371 at $2.50 but there is one seller willing to sell 1020 at $2.20, plus a bunch of others that also overlap. What is the calculation/process for matching for me to work out where this may open?

Cheers

2	3,371	$2.500
1	5,000	$2.420
1	2,000	$2.400
5	14,251	$2.380
1	4,000	$2.370
1	2,000	$2.360
2	11,200	$2.350
1	21,645	$2.310
2	10,750	$2.300
2	14,360	$2.220
18	88,577

$2.200	1,020	1
$2.360	450	1
$2.370	5,900	2
$2.390	23,231	1
$2.440	2,200	1
$2.450	20,000	1
$2.460	889	1
$2.470	1,600	1
$2.490	3,974	1
$2.800	4,000	1
	63,264	11

[kiwitrev]

Just an attempt to force the price down on small volumes and hoping to buy back in on larger vols at some later date. Also happens on the buy side with reverse rationale. Often these bids not successful.

[Snow Leopard]

This how it used to be and how I think it still is but I can not confirm this as the ASX appears to have revamped their site and the old links don't work.

Basically the opening price is set such that the most number of shares are traded.

On the assumption that what you have displayed were the orders at opening then a price of $2.39 to $2.40 would have resulted in 10,371 shares trading:
All the buyers at $2.5, $2.42 and $2.40 would have got what they wanted;
All the sellers at $2.20, $2.36 & $2.37 would have sold all their shares and a few thousand at $2.39 would have sold.

A higher (less buying) or lower (less selling) price would have resulted in less shares being traded.

In cases such as this where several prices meet this condition then the price nearest the previous close is chosen.

All shares go through at this opening price.

Trouble is that bids can be added and pulled seconds before opening these days and thus your opening price calculation is out of date before you have finished it.

Best Wishes
Paper Tiger

[Snow Leopard]

Same process happens at the close as well.

[shar187]

This how it used to be and how I think it still is but I can not confirm this as the ASX appears to have revamped their site and the old links don't work.

Basically the opening price is set such that the most number of shares are traded.

On the assumption that what you have displayed were the orders at opening then a price of $2.39 to $2.40 would have resulted in 10,371 shares trading:
All the buyers at $2.5, $2.42 and $2.40 would have got what they wanted;
All the sellers at $2.20, $2.36 & $2.37 would have sold all their shares and a few thousand at $2.39 would have sold.

A higher (less buying) or lower (less selling) price would have resulted in less shares being traded.

In cases such as this where several prices meet this condition then the price nearest the previous close is chosen.

All shares go through at this opening price.

Trouble is that bids can be added and pulled seconds before opening these days and thus your opening price calculation is out of date before you have finished it.

Best Wishes
Paper Tiger

Thanks, that explains it well for me. They ended up opening at $2.38, so knowing that with your explanation really helped thanks (and understanding potential of last minute/second changes).

[blobbles]

Just to bring this up again, my question is WHY people put these bids in? Is it so they are assured that they buy/sell shares, but are just wanting the averaged price? Or is it controlled by computers?

[warthog]

Just to bring this up again, my question is WHY people put these bids in? Is it so they are assured that they buy/sell shares, but are just wanting the averaged price? Or is it controlled by computers?

More info here:
http://www.directbroking.co.nz/direc...htutorial.aspx

[blobbles]

Oh yep, so an algorithm is used by NZX to figure it out, do they publish it?

I still haven't figured out the WHY of people doing it, I assume it is so they are just assured of their buy/sell order?

[TimmyTP]

Oh yep, so an algorithm is used by NZX to figure it out, do they publish it?

I still haven't figured out the WHY of people doing it, I assume it is so they are just assured of their buy/sell order?

That's right, it is just to get to the front of the queue. Normally during auction periods, only limit orders are allowed, so you cannot ask for 'best price'.
There is a risk to this of course - if you bid at a ridiculously high price and everyone at lower prices pulls their offers before you spot it, you might end up paying more than you anticipated.


Edit: With my armadillo hat on, I think it's accepted that there are some parties who might place bogus orders in order to tempt the unwary to place matching orders at a less than favourable price. I think the right term for that is gaming' and of course it would never happen in NZ.

[blobbles]

That's right, it is just to get to the front of the queue. Normally during auction periods, only limit orders are allowed, so you cannot ask for 'best price'.
There is a risk to this of course - if you bid at a ridiculously high price and everyone at lower prices pulls their offers before you spot it, you might end up paying more than you anticipated.


Edit: With my armadillo hat on, I think it's accepted that there are some parties who might place bogus orders in order to tempt the unwary to place matching orders at a less than favourable price. I think the right term for that is gaming' and of course it would never happen in NZ.

Oh right, thanks Timmy, as I suspected then.

Ha haa "never happen in NZ"... sounds like a Tui ad.