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Important share prices

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There are several important share prices. These are fairly self‐explanatory but I will outline them briefly here:

 Opening price: This is the price of the first trade for the day when the exchange opened.

 High price: This is the highest trade price for the day.

 Low price: This is the lowest trade price for the day.

 Last price: This is the price of the most recent trade.

 Closing price: This is the last price of the day (before the exchange closes).

 Price change: This is the amount by which the share price has changed. For example, after trading ceases for the day, the price change for the day is today's closing price minus yesterday's closing price. This could be zero if no price change occurred, or could be up (price rise) or down (price fall).

Within these prices, a heap of different scenarios are possible. Figure 2.1 shows just one scenario for a day's trading.

In this case, the shares closed yesterday at $1.50 and opened today at $1.45, before rising to a high of $1.60, falling to a low of $1.30 and then recovering to close the day at $1.40. This means the price change for the day was a fall of 10¢.

The scenario illustrated in figure 2.1 is a relatively complex one; often a share price moves in just one direction during the day's trading. For example, the price might rise or fall all day between opening and closing. After successive days, a price trend can become established. Analysis of trends is a very important aspect of share trading, and I discuss this in greater detail in chapter 9.


Figure 2.1: Possible price changes in one day's trading

Starting With Shares

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