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By evankoh posted on 18 Jul 2017  -  16,421 views

All along, I have naively displayed "Last Traded Price" and used it for all computations in StocksCafe without much consideration. That is until recently, when a user brought to my attention the difference between "Last Traded Price" and "Close Price". This led me to spend time learning about it and ultimately switch to using "Close Price" in StocksCafe instead.

Close Price vs Last Traded Price
Most of the time, the Close Price and Last Trade Price is the same. However, these two values could differ in some situations.

1) When the last traded price occurred several hours or even maybe several days ago. This usually happens for illiquid stocks where the last traded transaction happened quite some time before the closing time.

2) When a large volume of transactions happened just before the market close. Should the very last traded price be the close price? What if it is different from all the other transactions that happened just split seconds before it?

Who Uses What?
To illustrate, let us look at an example:

iShares J.P. Morgan USD Asia Credit Bond Index ETF (QL2) in SGX on 18 July.
The Last Traded Price is SGD 14.75, whereas the Close Price is SGD 14.73.

Note: If you are reading this article on 19 July or later, the information in the urls below might have changed as not all websites have the ability to pin to 19 July.

Last Traded Price
i) SGX
ii) Financial Times
iii) Morning Stars

Close Price
i) Yahoo Finance
ii) BlackRock - The company "distributing" this ETF.
iii) Bloomberg Terminal - According to the user who raised this point to me.

Why Switch To Close Price?
To clarify, it was not a deliberate decision to use Last Traded Price when I started StocksCafe (or SGXcafe then). It just so happened that I started extracting the Last Traded Price and continued to use it.

Upon learning more about it, I agree with the user who highlighted this issue that Close Price is a better value to use as it will reflect the prevailing market conditions more closely and is less susceptible to manipulation, and therefore providing users of StocksCafe with better up-to-date prices for investment decisions and portfolio valuations.

How Do Exchanges Compute Close Price?
This is out of scope of this article but I will list down a few references I found.
a) How SGX computes Close Price for ETFs
b) How HKEX computes Close Price
c) How Thailand Exchange computes Close Price

Happy investing!


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