Closing Stock Market Prices
In simple terms, stock market closing prices is the price at which a stock traded last at the end of the trading session. Many individual investors like us check closing stock market prices published in the newspapers to keep a track of the stocks that they hold. However, there is some discrepancy here as media can report different closing stock market prices.
Getting a closing stock market prices is more difficult than it sounds. When the regular trading session ends, many orders are placed in limit orders and unless they are not cleared, the closing price of a stock can not be calculated.
The stock markets have regular trading sessions from 9.30 am to 4.00 pm. Once the regular trading session is over, some markets allow after- hour trading. Many reports, publications use the figures of after- hour markets and display that as the closing price of a stock for that day. While generally, the 4 pm price is published as the closing price. The after hours trading prices are mentioned separately.
This difference in prices can cause a lot of confusion for an investor. To tackle this problem in USA, Consolidated Tape Association has put a system in place which makes the closing prices uniform. For all the trades executed during after- hours; should be displayed their prices tagged with ‘T’ on the consolidated tape, which runs at the base of the television screen, and should be separate from regular session’s closing prices. This is to clear the confusion to an investor who may get puzzled with the different closing prices displayed at various publications.
Closing stock market prices give a very clear valuation of a particular stock for a day. Even if closing price is not matching the after hour trading price, it still is an indicator for the investors as to how the security performed on the given day. By comparing the closing price of the day with its closing price of the previous day, an investor can judge the market sentiment for that stock.
An investor can track the closing price of a particular stock and can know if it is heading towards its lower resistance level or the next higher resistance level. He can make buying and selling decisions based on these readings. The investor can also use closing prices to place buy orders in limit, if he knows that the particular stock is going to perform well in few days.
For trading purposes, closing price of the stock is very important. During the day, the price of the security fluctuates considerably, which makes it difficult to ascertain a particular price for a stock. It is very important because the traders hold the stock at this price at an overnight risk. The trade analysts calculate price changes based on the closing prices. Apart from closing price of the stock, high and low and opening prices of the stocks are also very important. Together, all these values are known as range. These figures along with the volume are useful technical indicators like SMA (simple moving average) and EMA (exponential moving average).