What is a 'Price Change'

A price change is the 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. Price change over a period of time such as year-to-date or past 12 months are also commonly used time periods, and is generally computed as a percentage change.

BREAKING DOWN 'Price Change'

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

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 where 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 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 their 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. Net Change

    Net change is the difference between the closing price of a security ...
  3. Accounting Change

    An accounting change is an accounting method considered a bigger ...
  4. Announcement Effect

    The impact on markets from the news that a change will occur ...
  5. Total Return

    Total return is a performance measure that reflects the actual ...
  6. Rate Of Change - ROC

    The rate of change - ROC - is the speed at which a variable changes ...
Related Articles
  1. 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.
  2. Investing

    4 Investment Strategies To Learn Before Trading

    The best thing about investing strategies is they’re flexible.
  3. 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.
  4. Insights

    A Breakdown on How the Stock Market Works

    Learn what it means to own stocks and shares, why shares exist, and how you buy and sell them.
  5. Investing

    7 Ways Climate Change Affects Companies

    The SEC is now asking companies to report their climate impact in their books. Find out how this factor can affect a company's profitability
  6. Investing

    5 Companies That Are Changing the World We Live In (F, GOOG)

    Learn about the different types of companies that are changing the world; discover five specific companies that represent this innovation.
  7. Investing

    Using Volume Rate Of Change To Confirm Trends

    Wise traders rely on indicators that show a trend in volume, because without supportive volume, a price movement has no conviction.
  1. What stock factors should you consider when a company makes a CEO change?

    Learn about factors affecting the price of stock following a change in CEO. Explore why a change in CEO may be positive or ... Read Answer >>
  2. What are the differences between a change in accounting principle and a change in ...

    Learn how to differentiate between a change in accounting principle and a change in accounting estimate and how accountants ... Read Answer >>
  3. How should a change in accounting principle be recorded and reported?

    Learn about changes in accounting principle and why businesses make them, as well as the reporting and recording requirements ... Read Answer >>
  4. How to calculate a stock's adjusted closing price

    When the day's trading is done, all stocks are priced at close. The adjusted closing price accounts for any distribution ... Read Answer >>
  5. What is a good annual return for a mutual fund?

    Learn the key factors that determine if a mutual fund's return is "good" for you and your needs? Read Answer >>
Hot Definitions
  1. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  2. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
  3. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
  4. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative ...
  5. Internal Rate of Return - IRR

    Internal Rate of Return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.
  6. Limit Order

    An order placed with a brokerage to buy or sell a set number of shares at a specified price or better.
Trading Center