Each and every day there are millions of orders routed through the major financial exchanges. In essence, the market acts as an auction house for buying shares of publicly traded securities. Only when buyers and sellers agree on a price is an order executed. The key data points that traders communicate to the exchanges in an attempt to come to an agreed upon price is what creates a stock quote. In order to interpret a stock quote one much first understand the data and what each of the points represents. (For more, see: How to Use Stock Simulators.)

Understanding Stock Quote Data

When a buyer or seller transmits an order for a specific stock several key pieces of information need to be included: the security of interest, the price that the buyer/seller is willing to pay for or sell the shares at, and the quantity of shares he or she would like to buy or sell. Below is an example of what a stock quote looks like:

The bid and ask prices shown on a stock quote represent the highest bid price and the lowest ask price for the security in question. In the case of Microsoft Corp. (MSFT) above, the highest price that buyers are willing to pay is $46.39. On the other hand, sellers are only willing to sell shares for $46.40. Many stock quotes will also show the number of shares that are available for trading at both the bid and the ask price. Stock prices are then determined by changes in supply and demand. As more investors demand to buy shares the price of the security rises. As more sellers become available then the increased supply in shares available will send prices lower. (For more, see: Analyzing Chart Patterns.)

The data point found in the 'Last Trade' field is the price at which the last trade was executed. This figure is often compared to the closing price from the previous session. After a trading session is closed, the last traded price recorded and is what you find in the column of the markets sections of the newspaper. This data point is also often used to create various charting types such as the line chart.

The opening price is the first trade price that was recorded during the day’s trading range. This figure is often used in relation to the current price or the closing price from the previous trading session in an attempt to measure the strength of the momentum. A sharp change between the last traded price and its open generally suggests that a stock is experiencing strong upward momentum and often represents an interesting trading opportunity. The day’s high and low are also common data points found within a stock quote. This data is generally used by traders as a measure of volatility. (For more, see: Momentum Trading with Discipline.)

How Does Quote Data Appear on a Stock Chart?

One of the most popular charting types incorporates stock quote data by highlighting the open, high, low and close. As you can see from the chart below, the notches on the bar indicate the price levels where MSFT opened and closed. The left bar represents the open while the right bar represents the close. You’ll also notice that in the situation where the close is below the open then the bar will be colored red. Furthermore, the top of the bar represents the day’s high while the lowest point on the bar represents the day’s low. (For more, see: How Do I Calculate the Adjusted Closing Price for a Stock?)

The Bottom Line

Stock quotes consist of many data points. It's important to traders understand the key data points such as bid, ask, high, low, open and close. Being able to analyze this pricing and trend data allows traders and investors to make better informed trading decisions. (For more, see: 3 Ways Price Momentum Can Burn Your Portfolio.)

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