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Final price and transaction price

Final price and transaction price

In today’s era, when the spread of mass communication tools has made it possible to share people’s experiences with others even from far distances, many people are eager to participate in They take a step and enter these markets, but after receiving a trading code and entering the world of financial markets, they soon realize that trading and earning profit is not that simple and, like any other specialized work, requires training and experience.

Apart from the issue of knowing which stock or currency is suitable for buying and selling and when to enter the transaction, there are many basic terms and concepts that without knowing them, it will be difficult to even read the trading board of a symbol. Many of us do not know what the numbers and figures that we see on the trading board of a symbol or our broker’s trading page mean, and about terms such as stock float, stock closing price, first price, last trade price, allowed price range, etc. We do not have a complete

In this article, we are going to review the types of prices and learn about their key points that will help in making transactions.

Types of prices in financial markets

The price of stock symbols shows the status of that share during different periods in the capital market. This price is floating and decreases or increases based on the supply and demand for the share.

Analysts and investors of the capital market follow and examine these price changes in different time frames using different software or the trading board of the stock market in order to guess its next movement in the future based on the past behavior of the price.

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In general, there are 8 prices in the trading board of each symbol, which are:

  • First price or opening price

The price at which the first trade of the trading day is made.

  • Last transaction price or closing price

The price at which the last transaction of the trading day is done.

  • Final price

The weighted average of the prices at which the share was traded during a trading day.

  • Yesterday’s price

The closing price of the share is on the previous trading day.

  • Allowed price range

The minimum and maximum price at which the share can be traded on the current trading day is called the allowable price and the range of the allowed price fluctuation for the share.

  • day time

The lowest and highest price at which the share was traded on the current trading day makes up a range called the daily range.

(We call the lowest price Low price and the highest price High price).

  • week interval

It shows the amount of price fluctuation of a share during the current trading week and consists of the minimum and maximum price at which the share is traded in a week.

  • Year range

It shows the amount of price fluctuation of a share during a year and consists of the minimum and maximum price at which the share is traded in a recent year.


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What is the price of the last transaction in the stock market?

The meaning of the last transaction price (Close price) is the price at which the share was traded for the last time in a trading day. Normally, this price is variable due to the high volatility of the market. Therefore, for the price of a share, the closing price is used, and nevertheless, the price of the last transaction is of great importance. For example, if a person intends to place an order for a share and wants his registered order to be completed more quickly and more likely, he should pay attention to the price of the last transaction and consider the price of the order as a price close to it.

 

What is the closing price of shares in the stock market?

Each stock in each trading day may be traded thousands of times in its allowed range and experience different prices until finally, a daily candle is formed. This candle consists of the following four prices:

✔️The first price (Open price)

✔️Last price (Close price)

✔️The highest price

✔️The lowest price (Low price)

 

Now the question is, which price should we consider as the price of the share among the multitude of prices at which the share is traded?

This price is the final price, which is the basis for calculating and determining the origin of price changes and the permissible price range for the next day. For example, suppose that the closing price of a share in the trading board is 4000 Tomans. In such a case, if the allowed price fluctuation range is between negative 5% and positive 5%, this share can fluctuate between the prices of 3800 Tomans and 4200 Tomans during the future trading day. This specified interval is not certain, and it is possible that a share may be traded only at its price ceiling of 4,200 Tomans during a day and a buying queue will be created, or it may be traded at a price between its price ceiling and floor and never experience the ceiling and floor prices. .

What is the base volume?

To check how to calculate the final price of a share, it is first necessary to know what the base volume of the share is. The number of shares of a company that must be bought and sold during a trading day so that the share is allowed to experience an increase or decrease in price based on the ceiling of its fluctuation range on the next day, is called the base volume. This volume is equal to 0.0004 shares of a company in the first and second markets of the stock exchange and the base market of the over-the-counter market. To see this value, you don’t need to calculate because it is calculated by the stock exchange organization and found on the site, easily and by searching the name of the desired symbol, you can see the base volume of the share.

 

How is the final stock price calculated?

The closing price of a trading symbol in the Iranian Stock Exchange is actually the weighted average of the prices at which the share was bought and sold during a trading day. To get the closing price of a stock symbol, simply multiply the price of each transaction by the number of shares traded at that price. Get the total of these values ​​and finally, divide the total by the total number of shares traded during that day.

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Of course, it should be noted that this value obtained is correct in the case that the base volume of the trading symbol is filled, that is, the volume of transactions is greater than or equal to the base volume. Otherwise, these calculations are done in another way, which we will talk about in detail regarding the calculation of the final price according to the base volume of the share.

For example, suppose you want to find the closing price of a stock whose daily basis volume has been filled. If the final price of the share is 4000 Tomans, assuming that the share can fluctuate from negative 5% to positive 5% of this price, the allowed price range for the share’s fluctuation will be (3800 to 4200). If 5000 shares of this symbol are traded at the price of 3900 Tomans, 7500 shares at the price of 4200 Tomans, 1500 shares at the price of 4080 Tomans, 3700 shares at the price of 4150 Tomans and 1000 shares at the price of 4050 Tomans.

First, we multiply the price of each transaction by the number of shares traded at that price and add the result:

19500000 = 39000 × 5000

3150000 = 4200 x 7500

6120000 = 4080 x 1500

15355000 = 4150 × 3700

405000 = 4050 x 1000

 

76525000 = 4050000 + 15355000 + 6120000 + 3150000 + 19500000 = total

 

How to calculate the opening price of shares on the next trading day (the closing price of the share on the current day) using the closing price of the previous day and the base volume of the share

If the base volume of the share is not completely filled, or in other words, the volume of transactions carried out during a trading day is less than the base volume of the share.

 

Suppose in the previous example, the base volume of the share is 34,000 Tomans and the closing price of the share on the previous day is 4,000 Tomans. To calculate the opening price of the share on the next day (the closing price of the current day), you must do the following:

In the previous part, we obtained the weighted average of the traded share prices and the volume of transactions was 18,700 transactions in the current day.

In other words, to calculate the closing price of a share, if the weighted average of the traded prices of that share changes during the current day compared to the closing price of the previous day, and the number of traded shares (trading volume) during the day is equal or more If it is based on the volume of the share, the total amount of X Tomans is considered in determining and calculating the final price; But if the trading volume is less than the base volume and the ratio of the trading volume to the base volume is less than one, then X Tomans will be added to the previous day’s closing price.

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What are the factors that determine the final price of shares in the stock market?

Several factors affect the calculation and determination of the final price of shares, among them, we can mention the volume of transactions carried out in a trading day, the volume of the share basis, the increase of the company’s capital, the provision of pre-emptive shares for shareholders and other cases, which in this article, two We examine the most important influencing factors separately.

 

The volume of transactions made in a trading day

As mentioned earlier, the closing price of a share includes all the prices that have been achieved during a trading day and within the allowed range of fluctuation of the share in question. Each of the prices at which the share is traded has a specific volume, and all these trading volumes, which were mentioned in the formula for calculating the final price, will be used and effective in determining the final price of the share.

Base volume

The base volume is one of the factors that is included in the calculation of the closing price of the share so that all the allowed changes in one trading day are taken into account to determine the opening price of the shares on the next day. This volume has an important relationship with the final price of the share and its determination, and its existence causes that the final price does not change much if the volume of daily transactions is low. For example, if a stock faces a buying or selling queue during a trading day and the trading volume of that day is very small compared to the base volume of the stock, the closing price of the stock will not change much.

This issue is very helpful in negative market days and reduces the continuous decline of the share price and the locking of its selling queue. At the same time, it will cause that the shares in the sales queue will be exchanged with a suitable volume and with the entry of new shareholders, the strength and intensity of the price decline will be reduced, and if the transaction does not take place, the brake on the price decline will be pulled. On the other hand, it can control the price and the excessive growth of small stocks in the positive aspects of the market.

 

Why is the closing price used as a trading basis?

Suppose, instead of the closing price, the price of the last transaction is considered as the basis for the price of the next day’s transactions. In such a case, if most of the transactions during the current day are done at the price floor and only the last transaction is done at the price ceiling, the price of the next day’s transactions will be based on the current day’s price ceiling, which is invalid. The reverse of this issue is also possible.

It means that all the transactions of the current day are done at the price ceiling and only the last transaction, whose volume is less than the rest of the day’s transactions, should be done at the price floor. In this case, the price floor is considered the basis of the next day’s trading price, and this price, which is considered as the basis, will not be valid and may have been created as a result of behind-the-scenes speculations. For this reason, in order to avoid invalidation of the base price of future trading, the closing price is the best price that can be considered as the opening price of the next day.

 

What does it mean if the final price is not filled?

This phrase is a slang and common term among stock market traders. For example, let’s assume that a share had a positive fluctuation of 0.5% during most of the current trading day and was traded around this, but in the last 30 minutes of the day, the price increased and had a positive fluctuation of 5% and was traded around 5%. . On the other hand, the trading volume in these 30 minutes should be approximately equal to 10% of the total trading volume of the current day. In such a case, due to the fact that the volume of a large part of the transactions was carried out in the positive fluctuation range of 0.5%, the closing price of the share will be closer to 0.5% than 5%, and I say that the closing price of the share has not been filled.

 

What is the difference between the last transaction price and the closing price in the stock market?

1. The price of the last transaction is the current price of a share, and in fact, it is the last price at which the share was traded until that moment of the trading day, but the closing price of a share is the average of the prices at which the share was traded during a trading day. has been

2. The price of the last trade is used to create the daily candlesticks of the stock chart; If the closing price does not play a role in the formation of candlesticks in the share chart, it is only considered as the base price of the share on the next trading day.

3. The base volume has no effect on the price of the last transaction, but it is effective in calculating the final price.

4. The price of the last transaction of a share may fluctuate a lot. For example, it fluctuates between negative 5% and positive 5% in an emotional way, but the final price changes are far from excitement and only change with the logical and reasonable growth of the trading volume, which is much slower than the changes in the price of the last transaction of the share. .

5. In a share that failed to fill its base volume, it is possible that the price of the last positive transaction will grow by 5%, but the closing price of the share will not grow. In such a situation, the shareholder who bought his share on the last trading day and at a positive 5%, did not get a profit.

6. When the base volume of the share is filled, the closing price and the price of the last transaction are equal, and in fact, these two prices grow or fall equally.

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At what price is profit and loss calculated?

Profit and loss in financial markets will be accurate if you have sold your share, commodity, currency or in general your invested property. Therefore, in the stock market, you can calculate your definite profit or loss when you have sold the desired share; But if you plan to calculate the amount of profit or loss without selling your shares, you can do it in two ways.

The first state is when the market is open. In such a case, the price with which you calculate your profit or loss will be the price of the last transaction of the share. You intend to sell your shares at the moment; Therefore, in such a case, the final price will not have any role in determining your profit and loss.

We consider the next state when the market is closed. At this time, the price is not changing and you are not able to sell your shares and you have to wait until the next trading day. In such a case, the closing price, which is considered the basis of the next trading day’s price, is the best standard price for calculating profit or loss. Although the calculation of profit with this method is not accurate, but because the closing price is an equilibrium price for the next day’s transactions, it will be a good measure for calculating profit and loss.

 

How to view the closing price and last trade price of a symbol?

To view the closing price and the price of the last transaction of a share, you must first enter the website and search for the desired symbol. In this section, you can enter the price of the last transaction, the closing price

 

What are the advantages and disadvantages of using the closing price in the stock market?

Now that we are familiar with the closing price and the importance of using it in the stock market to determine the opening price and the next day’s fluctuation range, we want to talk about the advantages and disadvantages of using it.

Advantages

Using the closing price, as a criterion and basis for calculating the fluctuation range of the future day, prevents speculators from creating false prices in the share. This price causes the growth or decline of the price of a share to happen based on the reasonable and logical process of supply and demand.

Disadvantages

We know that traders enter the market and trade with the aim of making a profit, and if a share is in the buying queue for several days in a row and its trading volume is very low compared to the base volume, the closing price of the share, which is the basis of the day’s trading price It is a future transaction, it will not grow much.

This issue, just as it causes the share price to not grow emotionally and prevents sharp price increases and decreases, it causes a trader who entered the market with the aim of making a profit to be in a difficult situation to achieve the desired profit and the time to reach be very long to his benefit.

 

Frequently asked questions about the final price

What is the meaning of the last price?

The last price or the price of the last transaction is the price at which the stock was traded instantly.

 

Which price at the end of the trading session is the basis of the next day’s trading price?

The closing price at the end of the trading day will be the basis of the trading price of the next day.

 

How to view the closing price and last price of a symbol?

You can see the closing price and the price of the last transaction of a share by searching for the name of the symbol on the website or the trading panels of your brokerage.

 

Which concept is usually used to refer to the price of a share?

Because the price of the last transaction fluctuates a lot most of the time and is not a valid price to refer to the share price, we use the closing price which is calculated by considering the base volume and the weighted average of all the prices traded on the trading day.

 

Profit and loss calculation should be done with the closing price of the share or the price of the last transaction?

The definitive calculation of profit and loss of a share is done when that share is sold. If you intend to calculate the profit of a share before selling it, the profit calculation is done when the stock market is open, with the price of the last transaction and when the market is closed, with the closing price.

 

What happens if the closing price is lower than the last trade price?

The price difference between the closing price and the price of the last transaction is very important to determine the right time to buy and sell. In most cases, traders consider the closing price for buying and selling a share, not the price of the last transaction, and the reason for this is that the closing price is the basis for starting the next day’s trading.

For example, if the closing price of a share has grown by 0.5%, but the price of the last transaction experienced an increase of 5% and the share is locked in the buying queue, it is better not to buy the transaction. The reason for recommending not to buy in such a situation is that if you succeed and buy a share, the future price of this trading symbol will be lower than the price at which you bought the share, and even if during the entire trading day, it is at its price ceiling. trade, you will still be approximately at the break-even point of the share price with your purchase price.

Conclusion

In this article, we examined the types of prices in the financial markets and examined two of the most important prices, namely the price of the last transaction and the closing price, separately and in detail. We know that the closing price is the basis of the calculation of the opening price of the share and the fluctuation range on the next trading day, which is calculated according to the weighted average of the current day’s trading price, the current day’s trading volume and the volume of the share base. This price is considered as the best price for calculating the opening price of the share on the future trading day because it reduces speculations and is far from extreme fluctuations. In the end, we mentioned that this price and other information necessary to analyze and review a share can be viewed on the Rahvard website.

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