The closing price is one of four major data points used in day trading in the stock, cryptocurrency and other markets to track the performance of an asset. The other three are opening, high and low prices, with all four known together as “OHLC.”
Before the emergence of electronic communication networks in 1969, stock exchange trading was conducted exclusively during regular market hours, for example, from 9:30 am to 16:00 pm for the New York Stock Exchange.
As a result, assets’ performance could be clearly delineated between days: trading opened and closed at specific price points and within each day there were easily identifiable highest and lowest prices.
With the advancements in electronic trading, after-hours trading became available, albeit at significantly lower volumes compared to regular hours trading. This, however, has not made OHLC metrics obsolete — their usefulness for market analysis has ensured that they are still being tracked within the timeframe of regular market hours.
Cryptocurrency exchanges, which appeared in the early 2010s soon after the invention of cryptocurrencies themselves, supported 24/7 trading from the very beginning, owing to two facts: these platforms are located exclusively online and the assets listed on them are operational 100% of the time. However, they still provide their users with OHLC data, most commonly in the form of candlestick charts.
Closing price specifically is often considered by traders to be the most important of the four metrics, as it is used as a standard benchmark to evaluate an asset’s performance over different periods of time.
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