Net Change
Candlefocus EditorWhen the stock market opens each day, investors and traders note the opening prices of each security in the portfolio they keep. As the trading day progresses, the stock prices of each security tend to fluctuate, responding to news and macroeconomic events as investors buy and sell shares. As the market closes, the closing prices of each security are noted. The net change is then calculated as the difference between the closing price of the security on one day compared to the closing price of the security the previous day.
Net change is an important piece of information because it can provide a snapshot of the performance of a security in the short term. It allows analysts to study trading patterns, identify trends, and make predictions about the future. For example, net change can be used to gauge whether a security is in a positive or negative trend, and predict whether the price of a security is likely to increase or decrease in the near future. Traders also use net change to set their entry and exit points for investing.
Net change forms the basis of most line charts in technical analysis. Technical analysts look at data displayed in line plots in order to identify patterns in trading that may be indicative of future trends. By monitoring net change over time, traders can gain valuable insights into the performance of a security and make informed trading decisions.
In summary, net change is an important metric for investors and traders interested in tracking the performance of a security. It is used to identify price trends, set entry and exit points, and form the basis of technical analysis. By analyzing net change, investors and traders can gain valuable insights into the performance of a security and make informed decisions about their investments.