The closing price of a stock or another security is the last price at which it trades during the regular trading day. The asking price of a stock, more commonly known as the ask price, is the minimum price for which a seller is willing to sell it. Similarly, the bid price is the highest price a would-be buyer is willing to pay for a share of a given stock.
Closing Stock Price Definition
Traditionally, stock markets aren't open 24 hours a day. In fact, they're essentially only open during the business day on weekdays, with trading closed on weekends and holidays. In older exchanges, such as the New York Stock Exchange, a bell was historically rung to signal the start and end of the trading day. Exact hours and days of operation vary from market to market and country to country.
Nowadays, most exchanges use digital bells, and most trading is also conducted electronically, but the concept of the market opening and closing remains in place. One data point to which people watching the stock market often pay attention is the closing price of a stock. The closing stock price refers to the last price at which a stock traded during the official trading day.
Since it may take some time to fully process trades entered close to the end of the trading day, the final closing price isn't always available immediately after the market closes.
Ask and Bid Prices
Stock market professionals sometimes talk about ask and bid prices for particular stocks. The ask price reflects the amount of money that someone is asking for a share or group of shares of a particular stock. In other words, it is the minimum amount for which someone is willing to sell that amount of stock. The ask price is sometimes also referred to as an offer price since it reflects a price for which someone is offering to sell the stock.
The bid price reflects the other side of the transaction. Specifically, it's the maximum amount that someone is willing to pay for a group of shares that he wishes to purchase. In order for a trade to actually take place, someone must bid as much as someone else is asking for a particular set of shares.
The difference between the lowest ask price and the highest bid price for a stock is known as the bid-ask spread. Stocks or other securities with a smaller bid-ask spread are considered more liquid since there will be more successfully completed trades for these securities.
The same terminology is also used in other financial markets, from commodities trading to cryptocurrency markets such as Bitcoin.
Obtaining Stock Quotes
If you follow the stock market, you might see stock quotes published in newspapers, online and on television. Historically, newspaper financial pages printed the closing price for each stock alongside the highest and lowest prices at which the stock traded during the trading day.
Nowadays, all of that information is available online, but it's also possible to get real-time or near real-time quotes during the trading day, showing the most recent price at which a particular stock traded. You can get this information through an online brokerage of your choice or many financial news sites.
If you're looking to invest, you can use this information to determine if you're getting a good deal for a stock, to make educated guesses about the direction the market for that stock is headed and to know roughly how much you'll pay if you ask your broker to purchase a certain number of shares.
Trading After Hours
Even though stock markets officially close every day, it is still possible to buy and sell stock after hours. Different brokerages may give you access to different trading hours after the market has closed.
Prices after hours can be significantly different from the day's closing price, so make sure you have up-to-date stock quotes if you're looking to trade after the normal market session.
- Investopedia: Closing Price
- Investopedia: Bid and Ask
- Investopedia: Does the Closing Price Have to Equal the Last Price Traded?
- Investopedia: Closing Bell
- Charles Schwab: Should After Hours Trading Be Part of Your Stock Market Strategy?
- Finance Formulas: Bid-Ask Spread
- Investopedia: Stocks Basics: How to Read A Stock Table/Quote
Steven Melendez is an independent journalist with a background in technology and business. He has written for a variety of business publications including Fast Company, the Wall Street Journal, Innovation Leader and Ad Age. He was awarded the Knight Foundation scholarship to Northwestern University's Medill School of Journalism.