Opening Cross

DEFINITION of 'Opening Cross'

A method used by the Nasdaq to determine the opening price for an individual stock. This method accumulates data on the buy and sell interest in the stock two minutes before the market open. The Nasdaq makes this information available to all investors.

BREAKING DOWN 'Opening Cross'

The opening cross method helps to prevent large price movements shortly after the market open, which is one of the most active trading times. For retail investors trading on the open, this ensures greater fairness and confidence that the price received is a reflection of equilibrium prices prevailing at that time. Retail investors are often advised against trading too near the open or close of a market, especially with market orders, because there may be fast movements or imbalances that result in order execution at an unexpected price.