What is a 'Price Change'

A price change is a difference in the cost of an asset or security from one period to another. While it can be computed for any length of time, the most commonly cited price change in the financial media is the "daily price change," which is the change in the price of a stock or security from the previous trading day's close to the current day's close. A price change over a period of time such as year-to-date or past 12 months is also commonly used.

BREAKING DOWN 'Price Change'

Percentage price change is generally the norm for computing asset performance. For shorter intraday periods, an absolute price change may be used by momentum and algorithmic traders as the basis for trading and arbitrage strategies.

The price change forms one of the two elements that comprise the total returns from an investment over a period of time, the other being dividends or distributions obtained from the investment.

Price Changes and Market Performance

If a publicly traded security experiences numerous price changes in a relatively short timeframe, this could be labeled as a period of volatility. When a security’s price changes positively, with its value increasing rapidly, it might attract the attention of more investors who buy shares in the hopes of seeing higher returns. Price changes naturally can include declines wherein investors sell off stock, which could erase gains.

The drivers of price changes in publicly traded securities can include activities directly associated with companies. New appointments in executive leadership, the announcement of new strategies or products by companies, or positive reception of the companies’ products could also lead to price changes.

For example, if a company invests considerable time and resources to create a new product line, how the product is received by its customers could affect the company’s earnings. If there is a report that the product’s sales were above target, the company’s shares may see a positive price change as investors purchase more stock in response. Conversely, if a company sees some of its products perform poorly with their customers, the shares may fall in value.

External factors such as industry shifts, government regulations, or even severe weather that affects company operations can also influence price changes as investors weigh how those elements may influence a company's’ performance in the future. Examining a historic range of price changes can be a way to put into perspective the impact that particular events had on a company’s valuation.

  1. Change

    For an options or futures contract, change is the difference ...
  2. Value Change

    Value change is an adjustment to a stock's price to reflect the ...
  3. Net Change

    Net change is the difference between the closing price of a security ...
  4. Structural Change

    A structural change is an economic condition that occurs to dramatically ...
  5. Accounting Change

    An accounting change is an accounting method considered a bigger ...
  6. Close Period

    The close period is the time between the completion of a listed ...
Related Articles
  1. Trading

    Sensitivity Analysis For Black-Scholes Pricing Model

    Trading options requires complex calculations, based on multiple parameters. Which factors impact option prices the most?
  2. Investing

    The Only Constant Thing in Investing is Change

    Many of the changes in investing have been positive, like reduced fees and increased education.
  3. Investing

    The Art Of Selling A Losing Position

    Knowing whether to sell or to hold is tough. And no rule fits all. Find out what to consider.
  4. Trading

    The Fundamentals Of Forex Fundamentals

    Charting is not the only way to analyze the foreign-exchange market. Learn how to apply fundamental analysis to the economic indicators.
  5. Investing

    Revenue Projections Show Profit Potential

    Examining how a company makes money can offer clues about its earnings potential.
  6. Insights

    The Consumer Price Index

    Find out how this economic measure can help you make key financial decisions.
  7. Insights

    How to Understand a Stock Quote

    Trading stocks is a popular way to invest money. Learn the details of a quote and what its information suggests, including pricing data and charts.
  8. Investing

    What Type of Trader Are You?

    There are different trading strategies that investors use to profit from market movements. Which of these strategies for buying and selling do you use?
  9. Insights

    Economic Indicators That Affect The U.S. Stock Market

    Macroeconomic factors like GDP, Inflation, and Retail Sales affect the value of your portfolio. Understanding these economic indicators is vital for every investor in the marketplace.
  1. How does a change in CEO impact stock price?

    Learn what effect hiring a new CEO has on the value of a company's stock. Explore which factors are most likely to influence ... Read Answer >>
  2. How are share prices set?

    Different factors determine an initial share price, from an investment bank's valuation during an IPO to supply and demand ... Read Answer >>
  3. How do changes in interest rates affect the spending habits in the economy?

    Examine the factors that typically determine how consumers react to interest rate changes in terms of increasing their levels ... Read Answer >>
  4. What is a good annual return for a mutual fund?

    Before investing in mutual funds, it's important to understand individual goals for the investment over a specified time ... Read Answer >>
Trading Center