What is a closing price?
Every day of trading on a financial market has an opening time and a closing time. At the close of trading each day, every security will have a final price that it's selling for. This is the closing price.
Where have you heard about a closing price?
The closing bell on Wall Street is the most famous in the world, signifying the closing of the trading floor at 4 p.m. Eastern Standard Time (EST) each day. Once the bell rings, the last trading prices become the closing prices of securities.
What you need to know about a closing price...
It's important to remember that market activity can continue after the so-called close of trading, this is simply when the exchange floor is closed. After hours trading still occurs, and exchanges in other time zones remain open.
Closing prices do not take into account corporate actions, such as mergers and acquisitions, dividends and stock splits. The adjusting closing price edits the closing price if corporate action significantly affects the value of a security.
Comparing the closing prices of a security over different days can paint a picture about changes in the value of a security over a certain time frame and is helpful when analysing historical returns.