The closing price is the last price at which a financial asset (e.g., stock, currency, commodity) is traded during a specific trading session, usually at the end of a trading day. It typically serves as a critical reference point for both investors and traders to assess an asset’s value at the end of a trading period. However, some financial markets are always active and there is no closing price at the end of the day, but rather a closing price of a previous day’s candle or bar. Let’s explain them in more detail. 

Closing prices in different markets

It is crucial to also define the closing price in the constantly active markets. In Forex and crypto markets, there are several important closing prices, including session closing prices and previous candle closing prices. Session closing price usually refers to the last price of a previous trading session such as Asian, London, and New York. In crypto there is no such thing as a trading session or trading day and the closing price usually refers to the close price of the last candle or bar. This is especially important in crypto markets as they are active 24/7, so traders usually use this concept with candle or bar closing prices. 

Closing price is crucial in technical analysis, charting, and investment decision-making as it reflects market sentiment and is used to identify trends and patterns in financial markets. Many strategies use the closing price of the previous candle as a key reference point in defining the potential trading signals. It is actively used in the majority of technical indicators as well and is a staple of financial trading in all financial markets from Forex to stocks and cryptos. Technical indicators such as moving averages use closing prices to analyze the average price over a certain period. Since both technical indicators and technical analysis are almost based on the closing price data, the concept is the foundation for financial analysis. 

Closing prices are always part of historical data and are widely used in trading robot backtesting. Without the knowledge of closing price data about the trading asset and for a certain timeframe, it is impossible to test the trading algorithm's performance. 

Closing prices are also used to make trading robots more efficient. Using only key data and saving processing time is important for efficient and fast trading robot development. Often, algorithmic traders use closing prices of previous candles or moving averages to develop trading strategies. 

Closing price is a key concept in financial trading. It refers to the asset’s last recorded price, whether at the end of a trading day or as the close of a candle in 24/7 active markets. It is super important in technical analysis, fueling algorithmic trading as essential data. 

Understanding the closing price is key to mastering the financial markets.