Question for experienced traders?

pasha · #1 11th November 2005, 11:24 PM

I have noticed many times that a stock will close at a certain price and the next day will open at a different price. Some of these overnight price moves are quite large.
Just like day moves are capped to 20%, is there a limit to these overnight changes?
What exactly causes such large changes?
In thinly traded stocks this type of move happens all the time but in high volume stocks it is not expected.

gandharvashu · #2 12th November 2005, 06:40 AM

Yes for every stock there is a price band specified by exchange like 5%, 10%, 15%, 20%, etc. You can check BSE for price information where they have listed these bands. Stocks cannot exceed their band on that day, may be it is up or downward price. Generally these thin volume stocks are part of T, TS, or Z category and these categories have 5% bands. Only trade in thin volume stocks with great conviction, otherwise you can get trapped that is stocks opening in down freeze.

kaka · #3 12th November 2005, 10:53 AM

one can manipulate prices in a thin volume stocks easily by buying or selling in first few minutes of trade

but then as others start to trade the prices gets stabilised with time to were it shud be

pasha · #4 12th November 2005, 05:16 PM

>>one can manipulate prices in a thin volume stocks easily by buying or selling in first few minutes of trade
but then as others start to trade the prices gets stabilised with time to were it shud be
Yes, so then the opening price will be recorded. Even then, the difference in price between close and next day open is substantial.
Do these close to open changes have any limit%? If buying a stock today at 100, tommorrow morning it could open at 50. Possible?
Just theoretical, but still needs to be answered.

kaka · #5 12th November 2005, 06:23 PM

Quote:

Originally Posted by pasha

Do these close to open changes have any limit%?

yes if the stock has circuit limit

let us say that u bought a stock at 100 which has circuit limit of 10 % so on that particular day the stock can move in a range of 90 to 110

let us say that it closes at 105 on that day

so for the next day it cannot open less than 94.5 or more than 115.5 because of its 10% circuit limit

Quote:

Originally Posted by pasha

If buying a stock today at 100, tommorrow morning it could open at 50. Possible?

yes if the stock has no circuit limits
which fortunately most stocks have

pasha · #6 12th November 2005, 10:07 PM

Thanks kaka, understood.

sudoku1 · #7 11th May 2011, 11:58 AM

OFSS.............shooting thru d roof !!

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