what does previous close mean in stocks?

A clear, beginner-friendly explanation of what does previous close mean in stocks, how exchanges determine it, differences with after-hours and adjusted close, and practical uses for traders and an...

2025-11-12 16:00:00

By Crypto Trailblazer

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Previous close (stocks)

What does previous close mean in stocks? In simple terms, the previous close is the final price at which an instrument traded during the prior official trading session. This definition applies to stocks, ETFs, indices, bonds, futures and options and serves as the benchmark price carried forward into the next trading session. What does previous close mean in stocks is a common question for new traders because it underpins percent-change displays, gap analysis and many end-of-day calculations.

Definition and basic concept

The phrase "what does previous close mean in stocks" asks for the final reported trade price from the prior regular session (often labeled "Prev. Close" or "Previous Close"). The previous close is usually the closing price of the prior trading day and is the reference used by tickers and charts to show daily change.

How the previous close is determined

Exchanges determine the official close by several methods. Often it is the last trade during regular hours, a closing auction price, or a weighted average (such as a short VWAP) over a closing window. Practices vary by exchange, so traders should confirm the method used by their exchange provider.

Exchange-specific examples

NYSE and Nasdaq: formal closing auctions generally determine the published closing price. As of 2026-01-15, according to Investopedia, closing auctions are used to aggregate supply and demand and produce a single official close.
Indian exchanges: closing prices sometimes use weighted averages across a short window to reduce outlier effects.
Broker platforms: many brokers display the exchange-provided previous close but may label extended-hours prices separately.

Timing, sessions and time zones

In U.S. markets, the regular session typically ends at 4:00 PM ET; that regular-session close is the previous close for the next day. When comparing international markets, always account for local time zones and market calendars.

Extended-hours and after-hours trading

After-hours or pre-market trades generally do not alter the official previous close for the regular session. Many data feeds show after-hours quotes separately while keeping the previous close as the regular-session benchmark.

Adjustments for corporate actions

Adjusted close differs from the raw previous close when stock splits, dividends or similar corporate actions occur. Historical series are often adjusted so percent-change calculations remain meaningful after such events.

Uses and importance

Traders and analysts use the previous close to calculate daily percent change, identify opening gaps, set stop levels, and populate candlestick charts. Understanding "what does previous close mean in stocks" helps interpret headlines and automated alerts that reference daily moves.

Relationship to opening price and gaps

The opening price can differ from the previous close because of overnight news, pre-market orders or after-market trades. An up-gap occurs when the open is above the previous close; a down-gap when it is below.

Settlement price vs closing price

A closing (transaction) price and a settlement or clearing reference price may differ. Settlement prices used for clearing or index calculations can be exchange-defined reference prices rather than the last trade.

Display conventions in market data and broker platforms

Tickers typically show: previous close, last traded price (LTP), net change and % change (commonly computed relative to the previous close). Check your data provider for exact definitions.

Special cases and caveats

Trading halts, very low liquidity or stale last trades can make a published previous close unrepresentative. Exchanges sometimes publish special closing procedures in these cases.

Crypto markets — differences and considerations

Because crypto trades 24/7, "previous close" is not intrinsic. Data providers may define a daily close by calendar cutoff (e.g., UTC 00:00) or exchange-specific epoch. When asking "what does previous close mean in stocks" remember crypto uses different conventions.

Example calculations

Percent change: ((Current Price - Previous Close) / Previous Close) × 100. To answer "what does previous close mean in stocks" numerically, if previous close is $100 and current price is $105, percent change is 5%.
Opening gap: Open − Previous Close.
Adjusted close after a 2-for-1 split: prior prices are halved so comparisons remain consistent.

Common misconceptions

Previous close is not necessarily the last traded price during extended hours. Adjusted close is different from the raw previous close. Settlement price, last trade and previous close can be different values.

How traders and analysts use previous close

Typical uses include gap trading strategies, daily performance summaries, portfolio P&L snapshots and inputs to technical indicators.

Data integrity and best practices

For critical calculations use official exchange data, know whether quotes are delayed, and confirm provider-specific definitions of "close." For trading, consider using reputable platforms like Bitget exchange and Bitget Wallet for custody needs.