How are opening and closing prices determined?

[dmacdonal9]

I'm backtesting an EOD system on stocks that enters and exits on open and close. I'm wondering how accurate my historical opening and closing prices are in relation to what really happens?

I've always wondered how the exact price can be determined, since many trades happen in those split seconds. Which ones are actually reported as open and close?

I understand too that the rules are different on the NASDAQ where the market is distributed, and the NYSE, where it is more centralized.

Can anyone comment on what's behind these prices?

 

[NihabaAshi]

Originally posted by dmacdonal9
I've always wondered how the exact price can be determined, since many trades happen in those split seconds. Which ones are actually reported as open and close?

I have a very simple answer...it's like any sport that measures results via an electronic clock.

For example...take the current winter Olympic games...the first skater to cross the line (even in what looks like a photo-finish dead heat) can be measured in 10ths or 100ths or seconds.

Thus, the first one across the line is like saying is the OPENING price and the last one across the line is the CLOSEING price.

I'm a big sports fan...sorry about the sports analogy

Nihaba Ashi