What Is Open?
The term "open" appears in several usages in the financial markets. However, there are two that hold particular significance, depending on the context in which they are used.
- The open is the starting period of trading on a securities exchange or organized over-the-counter market.
- An order to buy or sell securities is considered to be open, or in effect, until it is either canceled by the customer, until it is executed, or until it expires.
Understanding Open
Market Open
Depending on the exchange or venue, the open may be the first executed trade price for that particular day. It is very likely that the open price will not be the same as the previous day's closing price.
Other venues might sample trading for a short period of time near the beginning of the official trading day and create an official open. It may or may not be the same as the price of the first trade. This may be the method used for securities that have very little trading activity and may just be the previous day's close.
Different exchanges will have different opening times. For instance, theNew York Stock Exchange (NYSE)and theNasdaq open at 9:30 am EST, whereas theChicago Mercantile Exchange (CME)opens trading in U.S. Treasury securities futures at 8:20 am EST (7:20 CST).
Order Open
The primary reason why an order remains open is that it carries conditions, such as price limits or stop levels, unlike a market order.A limit order to buy, entered when the current traded price of the security is already above that limit price, will not execute until such time that the market declines to meet it. A buy stop order will not turn into a market order until the security reaches a specified price level.
Another reason may simply be the lack of liquidity for that particular security. If there are no established bids and offers by market makers or other traders then no trading occurs.
There is a related use for the term open that is of interest to futures and options traders. Open interest is the total number of open or outstanding options or futures contracts that exist at a given time. Unlike the stock market, where the number of shares outstanding is fixed by the company itself and does not change very often, open interest in the derivatives markets changes constantly. This can yield important information to traders and analysts about how aggressively market participants act in rising and falling price trends.
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FAQs
Limit, buy stop, and sell stop orders are examples of open orders. When backlog orders go unfilled for an extended period, they expire and are deactivated automatically. However, investors can cancel these orders before they are fulfilled.
What does an open order status mean? ›
An open order is an order that has been placed by a customer, but not yet fulfilled. It essentially means that the product or service in question is still on its way to the customer. While this may seem like an obvious concept, there are a few things to be aware of when dealing with open orders.
What does it mean when a trade is open? ›
Key Takeaways
An open position is a trade that has been established, but which has not yet been closed out with an opposing trade. If an investor owns 300 shares of a stock, they have an open position in that stock until it is sold.
What is the difference between open order and closed order? ›
Open- The order was placed or created. There is work to do for the order, which can include processing payment, fulfilling, or processing returns. Closed- Closed meaning order or return complete.
What are the three most common types of orders? ›
Here we focus on three main order types: market orders, limit orders, and stop orders—how they differ and when to consider each. It helps to think of each order type as a distinct tool, suited to its own purpose.
What is an example of an open position? ›
Consider that an investor owns 500 shares of a certain stock. That means there are open positions in that stock. Once the investor manages to sell those 500 shares, the open position closes. Usually, buy-and-hold investors have one or more open positions at any given point in time.
How do open orders work? ›
An open order is an unfilled working order that will get executed when the specific requirements have been met unless it's cancelled by the customer or it expires. Open orders can be subject to delayed executions because they're not market orders. A lack of market liquidity could cause an order to remain open.
What is the meaning of at the open order? ›
An at-the-opening order is an investor's directive to her broker or brokerage firm to buy or sell a specific security in their account at the very beginning of the trading day. If the order cannot be executed at the opening of the stock market, it will be canceled.
What is the meaning of open delivery? ›
Q. What is Open Box Delivery? Ans: In Open Box Delivery, our Wishmaster will open the package in front of you at the time of delivery. Both outside as well as the brand packing is opened and shown to you. This ensures that you only receive what you ordered.
What are open positions? ›
An open position is a trade which is still able to generate a profit or incur a loss. When a position is closed, all profits and losses are realised, and the trade is no longer active. Open positions can be either long or short – enabling you to profit from markets rising as well as falling.
There are several types of “sell to open” trades in trading, including: Short selling stocks: An investor can sell short a stock by “selling to open” a position. This means they borrow shares from a broker, sell them at the current market price, and hope to buy them back at a lower price in the future to make a profit.
Can I withdraw with open trades? ›
Yes, you can make withdrawals anytime without interrupting your active trades provided your account is sufficiently funded for your positions to remain open.
What does in open order mean? ›
What is an Open Order? An open order is an un-filled, or working order that is to be executed when an, as yet, unmet requirement has been met before it is cancelled by the customer or expires.
What does it mean when an order is open? ›
A market order that was placed when the market was closed and has not filled yet, or a limit/stop order that has been placed but the price has not been met yet and therefore has not executed yet is called an open order.
What does "open" mean in stocks? ›
The open is the starting period of trading on a securities exchange or organized over-the-counter market. An order to buy or sell securities is considered to be open, or in effect, until it is either canceled by the customer, until it is executed, or until it expires.
What is the best description of an open order? ›
An open order is an unfilled working order that will get executed when the specific requirements have been met unless it's cancelled by the customer or it expires. Open orders can be subject to delayed executions because they're not market orders. A lack of market liquidity could cause an order to remain open.
What are examples of orders? ›
As a verb, order also means "command:" Talk out of turn in court and the judge will order you to be quiet. In a restaurant you give the waiter your order, which is what you want to eat, not your idea of how to organize the pantry. An order is also a group, like the Freemasons or the Order of St. Benedict.
What is an example of buy to open? ›
Example of Buy to Open
If a trader has a bullish outlook on XYZ stock they might use a buy to open options strategy. To do that, they'd purchase shares or buy call options. The trader must log in to their brokerage account then go to the order screen.
