Closing Price

Closing price is the last traded price of an asset at the end of a trading session. It is widely used in performance reporting, technical analysis, and index calculations.

Role in Trading

Many indicators and charts use closing prices because they reflect where the market settled for the session. Daily returns, moving averages, and volatility measures often rely on close to close data. Portfolio valuations and risk reports typically use official closing prices.

Types of Closing Prices

Exchanges may publish an official closing price based on auction mechanisms or a closing trade. Some venues also publish settlement prices for derivatives, which can differ from the last trade. In markets with extended hours, the official close may be distinct from after hours prices.

Practical Considerations

Closing prices can be affected by end of day liquidity, auction imbalances, and large index related flows. Traders should understand the exchange rules that define the close. For intraday strategies, the closing price may be less relevant than real time marks.

Limitations

Closing prices are a single point in time and may not reflect intraday risk. They can be distorted in illiquid markets or during volatility events. Using only closing prices may hide large intraday drawdowns.

Conclusion

The closing price is a standard reference point in trading and investing. It is useful for consistent reporting and analysis, but it should be interpreted with awareness of market microstructure.