WHAT IS THE 'Closing Range'

Closing range is the band of prices that a security trades at in a specified period, shortly before the market closes.

BREAKING DOWN 'Closing Range'

Closing range refers to the trading range or the minimum and maximum prices that a contract is traded at during the official closing period. The closing period is specified by the exchange in a futures market. The closing range for a specific security will generally not be very wide in the case of an orderly market, but may be quite significant during periods of volatility and turmoil. A pattern of consistently higher closing ranges for a stock, in comparison to its prices over the rest of the day, may indicate that it is being subjected to a form of market manipulation known as high close. When utilizing a high close tactic, stock manipulators make small trades at high prices during the final minutes of trading to give the impression that a stock sold better than it did.

The closing range is used to determine the settlement price, which is then used to calculate the gains and losses in futures market accounts.

Futures Market

Closing range refers to high and low prices for a security within a futures market. A futures market is a type of auction market in which investors buy and sell commodity and futures contracts for delivery on a specified future date. Examples of futures markets include the New York Mercantile Exchange, the Kansas City Board of Trade, the Chicago Mercantile Exchange, the Chicago Board of Options Exchange and the Minneapolis Grain Exchange.

Futures contracts are the assets traded in a futures market. These contracts are legal agreements an investor makes to buy or sell a particular commodity at a predetermined price and specified time in the future. Futures contracts are standardized for quality and quantity to facilitate trading on future exchanges. The buyer of a futures contract is taking on the obligation to buy the underlying asset when the futures contract expires. The seller of the futures contract is taking on the obligation to provide the underlying asset at the expiration date.

Producers and suppliers of commodities make futures contracts to avoid market volatility. These producers and suppliers negotiate contracts with a buyer who agrees to take on both the risk and reward of a volatile market. Both hedgers and speculators commonly use futures contracts. Producers of an underlying asset hedge or guarantee the price at which the commodity is sold or purchased, while portfolio managers and traders may also make a bet on the price movements by using a futures contract.

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