Closing price

3 Key Takeaways

• Benchmark: The closing price is a standard benchmark used by investors to track a security’s performance over time.
• End of Day Value: It represents the most up-to-date value of a security at the end of a trading day.
• Reference Point: It serves as a reference point for technical analysis, charting, and other forms of market analysis.

What is Closing Price?

The closing price is the last traded price of a security before the market officially closes for regular trading. For many U.S. markets, regular trading sessions run from 9:30 a.m. to 4:00 p.m. Eastern Time. The closing price is determined by the final transaction that occurs before the market closes, and it is typically the price used to calculate a security’s daily change and market capitalization.

Importance of Closing Price

• Performance Tracking: Closing prices are used to track a security’s performance over time, allowing investors to assess its historical trends and potential future direction.
• Valuation: It serves as a basis for calculating a company’s market capitalization, which is the total value of all its outstanding shares.
• Market Analysis: Closing prices are essential for technical analysis, which involves studying price charts and patterns to predict future price movements.

How Closing Price is Determined

The closing price is determined by the final transaction that occurs before the market closes. This transaction may involve a single share or a large block of shares. In some cases, the closing price may be determined by an auction process, where buyers and sellers submit their orders, and the price is set at the point where supply and demand are balanced.

Examples of Closing Price

• Stock Closing Price: If the last traded price of Apple stock at 4:00 p.m. EST is $150, then $150 is the closing price for that day.
• Commodity Closing Price: If the last traded price of gold at the close of the market is $1,800 per ounce, then $1,800 is the closing price for gold.

Real World Application of Closing Price

Closing prices are widely used in the financial world. Investors, traders, and analysts rely on closing prices to make informed decisions about buying, selling, or holding securities. Financial news outlets report closing prices daily, and they are used to calculate various market indices, such as the Dow Jones Industrial Average and the S&P 500.