Is the Closing Price the Last Price Traded?

The closing price is the final valuation of a security during regular trading hours, while the last traded price (LTP) is taken from the last transaction involving a particular security. One would think they should be the same if you're looking up the price of a stock after hours, but that's not always the case. The closing price of a security can vary from the LTP at the end of the day for several reasons: inconsistent reporting standards among traders and exchanges, the flurry of activity in the final half-hour before the market closes, and trading continuing after the stock exchange has closed for the day.

The Closing Price and Last Traded Price (LTP)

The closing price is the last transacted price in a security before the market officially closes for regular trading. Investors often use this price as a reference point for technical analysis and charting the changes in a stock’s value over time.

The LTP, meanwhile, is the value at which the last transaction occurred for a particular security. Unlike the closing price, which is calculated once a day, the LTP changes regularly throughout the trading session.

You’d assume that the closing price and LTP would be the same once markets close for the day. In reality, it’s a little more complicated. The last trade you see at the close may not be the last.

The Final Half-Hour

The final 30 minutes before the bell rings and the market closes are usually the most hectic. The large volume of trades within this short time frame makes it challenging to determine the exact final trade of the day. Many stocks trade heavily this time, and a few minutes are required to process the orders and determine which among them counts as the last trade.

Depending on the exchange or the stock quote service you're using, the genuine last trade may be posted anywhere from 30 seconds to 30 minutes after the closing bell rings.

Consolidated Quotes and Exchange Quotes

The closing price you see when you search online is often a consolidated quote. According to Nasdaq, this closing price is not to be confused with "the final last sale eligible trade report submitted...during the regular trading session by any market center." The quotes you see online come from a system that pulls data from all the stock exchanges and puts them into one data stream.

In addition to a consolidated closing quote, many exchanges, including the New York Stock Exchange (NYSE) and the Nasdaq, offer a different official last trade or closing price for trades on their exchanges. The "closing cross" determines the Nasdaq official closing price (NOCP). Meanwhile, the NYSE determines closing prices by focusing on market-on-close (MOC) and limit-on-close (LOC). Let's differentiate these to allay some confusion:

• NOCP: This price is determined by the Nasdaq at the end of each trading day. It's calculated through the "closing cross," where buy and sell orders are matched at the market's close to determine the day's final price for each security.
• MOC orders: Orders to buy or sell a security at the end of the trading day at a price equal to its closing price. The NYSE uses these orders to help determine the closing price of a security.
• LOC orders: Like MOC orders, they allow investors to specify the highest or lowest prices they are willing to buy or sell a security at the end of the trading day. Like MOC orders, LOC orders contribute to determining a security's closing price on the NYSE.

The Effect of After-Hours Trading

The regular trading session for U.S. stocks starts at 9:30 a.m. and ends at 4:00 p.m. ET on weekdays, holidays excluded.

However, some exchanges also have premarket or after-hours trading sessions. In the U.S., this would be between 4:00 a.m. and 9:30 a.m. ET and 4:00 p.m. to 8:00 p.m. ET on weekdays.

After-hours trading allows investors to buy and sell securities outside regular trading hours to respond to news or data releases after the close. While there are fewer stocks traded at this time, these trades still affect share prices. This means the opening price for a stock on the following day may differ from the price at which it closed the previous day.

Since the beginning of after-hours trading in 1991, it has been normal for the LTP to differ from the closing price of the same stock. This is because the last price, in this instance, is from the last transaction in after-hours trading.

The Bottom Line

The closing price is the price at which a security ended the trading session. However, that doesn’t mean it's the last price traded for the day. The closing price for the same security may be reported differently by various outlets, data vendors, and brokers. It can take a while to identify the actual last trade in a busy closing session, and investors can trade after the market closes, shifting the stock price.