Definition:

The Previous Day Close refers to the final price at which a security, such as a stock, was traded on the previous trading day. It is a key data point used by investors and analysts to assess the performance of a security.

Examples

If a stock closed at $150 on Tuesday, then $150 is the Previous Day Close for Wednesday. Similarly, if another stock closed at $75 on Friday, that price is the Previous Day Close for the following Monday.

Formula:

Previous Day Close = Closing Price of the Security on the Previous Trading Day

How to use the metric:

Investors use the Previous Day Close to compare with the current trading day's opening price to gauge market sentiment. It is also used to calculate daily price changes and percentage changes, which help in analyzing trends and making trading decisions.

Limitations:

The Previous Day Close does not account for after-hours trading, which can significantly affect the price of a security. It also does not reflect any news or events that may have occurred after the market closed, which could impact the security's price the next day.

Applies to:

The Previous Day Close is applicable across all industries where securities are traded, including stocks, bonds, commodities, and foreign exchange markets.

Doesn't apply to:

The metric is not applicable to industries or assets that do not have a regular trading schedule or where prices are not determined by market trading, such as real estate or private equity, because these do not have a daily closing price.

Summary:

The Previous Day Close is a fundamental metric used in financial markets to assess the last traded price of a security from the previous trading day. It is widely used for analyzing market trends and making informed trading decisions, though it has limitations in not accounting for after-hours trading or new developments post-market close.