Ask Colin

Why are the opening and closing prices so emotion-charged?

It is the opening price that is particularly emotion-charged. This happens because when the market is open and news comes out, people can act on it immediately. However, if the market is closed, they feel trapped by the situation, especially if they are on the wrong side of the market. Also, when the market is closed, people talk and think a lot. They build up confidence in a view and are itching to implement it. So, at the open there is this rush of action.

The closing prices are less charged with emotion, except perhaps when there are dramatic events happening and the closing bell has come before the market has worked out the crisis and established some sort of equilibrium price. Again some people will have been frantic to act against a time constraint.