Closing Price Definition

What is a closing price?

A closing price is the last level at which an asset was traded before the market closed on any given day. Closing prices are often used as a marker when looking at movements over a longer term. They can be compared to previous closing prices, or the opening price to measure an asset’s movement over a single day.

Closing share prices explained

Some financial assets only trade for certain hours each day. Stocks and indices, for instance, can traditionally only be traded while their exchanges are open. Until those assets become tradable again, their closing prices are the most up-to-date level for the asset.

Every day when the market opens, shares open at a specific price, called the opening price. Share prices then move constantly throughout the trading day as supply and demand for stock changes. And, when the market closes, the stock’s final price is recorded.

The closing price may be higher or lower than the opening price, depending on the market sentiment that day. Traders can speculate on these price movements via CFD trading.

Closing price and corporate actions

Corporate actions are actions taken by a company after trading hours, such as stock splits or dividend payments, that require its stock’s closing price to be adjusted.

Adjusted closing price

The adjusted closing price represents the accurate closing price based on corporate actions. For example, if the closing price of company ABC’s stock was £21.90, but it made dividend payments of 100p per share, the closing price will be adjusted to £20.90.

Similarly, if company ABC undergoes a five-for-one stock split after the markets close, the share price will be divided by five. If it was trading at £21.90, its new price would be 438p. Although the share price has changed, the fundamentals of the business – such as its market capitalisation – will not change, as the number of shares increase.

Closing prices and after-hours trading

Some providers offer certain markets out of hours. IG offers after-hours trading on many US stocks. This enables you to trade when the underlying exchanges are closed. However, the closing price for that day will still listed as the price when the exchange closes.