Opening Transaction

Posted in Finance, Accounting and Economics Terms, Total Reads: 271
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Definition: Opening Transaction

Opening transaction is defined as the first thing or transaction which is carried out as part of a business between two or more entities. It is the first or opening activity which is based on a certain financial transaction or which has a certain value in regard to the business taking place.


In terms of stock trading, an opening transaction refers to first trade that happens during a trading day.


An opening transaction can be buying of stocks if it appears profitable and vice versa. At the end of the day, the profit or loss is determined by the price during the opening transaction and the closing transaction.


Example:

If an opening transaction in the short sale of 1,000 shares of a stock that is currently trading at Rs 100, and the closing transaction includes the purchase of that 1,000 shares at Rs 90, the gross profit on this trade would be Rs 10,000.


Advantage:

• It is the beginning of the execution of trade


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