# Net Change: What it is, How it Works, Charts

> **Definition**
>
> Net change is the difference between the closing prices of a security from one trading period to the next, commonly used to assess daily price movements in financial markets.

## What is Net Change?

Net change is the difference between a prior trading period’s [closing price](https://www.investopedia.com/terms/c/closingprice.asp) and the current trading period’s closing price for a given security. For stock prices, net change is most commonly referring to a daily time frame, so the net change can be positive or negative for the given day in question. Though the net change for stocks and most securities is quoted in U.S. Dollars when reported by financial media, the net change can be calculated and quoted in any denomination depending on what is being traded.

### Key Takeaways

*   Net change is the difference between closing prices from one day to the next.
*   Net change is the most commonly reported data from securities quotes.
*   Net change forms the basis of most line charts in technical analysis.

## Understanding Net Change

Technical analysts use net change to chart and analyze stock prices over time in [line charts](https://www.investopedia.com/terms/l/linechart.asp). For example, a stock might close at $10.00 the prior session and $10.25 in the current session, which translates to a net change of $0.25 per share. Many investors also look at the net change in the context of a [percentage change](https://www.investopedia.com/terms/p/percentage-change.asp) to see how significant the movement is relative to the price.

In most charting platforms net change is automatically adjusted to reflect the impact of dividend distributions or stock splits. For example, a stock that trades at $60.00 has a 2-for-1 [stock split](https://www.investopedia.com/articles/01/072501.asp) the next day and closes at $30.00; the next session will have a $0.00 net change. This makes the charts more usable for gauging the changes in value over time, but can create some distortions when looking back at the historical data. For example, a particular security may not have actually ever traded below $5 per share, but adjusted historical charts may show the price down that low.

There are some instances, however, when electronic information or historical data may not be updated after being inaccurately reported, so it’s important for investors to double-check that the net change is correct when doing research on historical prices.

## Reading Stock Quotes

Many stock market apps and newspapers publish watch lists and stock tables that include the company name, ticker symbol, volume, high, low, close, and net changes for the previous session. Additional information, such as the 52-week high, 52-week low, [dividend yield](https://www.investopedia.com/terms/d/dividendyield.asp), yield percentage and [price-earnings ratio](https://www.investopedia.com/terms/p/price-earningsratio.asp) may also be included. Because quotes get retrieved from multiple exchanges, stock data may differ slightly.

Technical analysts use electronic stock quotes rather than delayed [stock market apps](https://www.investopedia.com/best-stock-trading-apps-4587996) and newspapers since they provide real-time information. In these cases, the net change is typically displayed next to the current price along with the percentage change. For example, an electronic quote may look something like “163.65 -0.45 (-27%)." The first number is the last trading price, the second number is the net change, and the third number is the percentage change.

## Point-and-Figure Charts

Most stock charts plot a security's closing price over time and optimize around a daily time frame. However one form of charting, known as [Point-and-Figure](https://www.investopedia.com/articles/technical/03/081303.asp), focuses entirely on the aspect of net change without respect to current price, time, volume or any other factor. Point and figure charts represent filtered price movements rather than the actual price of a security to show trends.

Point and figure charts contain rising columns of Xs and falling columns of Os that represent a net uptrend or a net downtrend, regardless of the price fluctuation in between the start and end points of these trends. Since they’re based on price change rather than time, these charts are ideal for detecting directional patterns and trends in a condensed format rather than looking over a much longer period of time. This focus on net change, proponents insist, creates the opportunity to create price targets that detail where the trend might lead.

![Image](https://www.investopedia.com/thmb/CfjuXwXnKwsd4-RO2x_oFeOp4PY=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/dotdash_INV_final-Net-Change_Feb_2021-01-734cfc735ec54c73bacf7e6a659d2aba.jpg)

*— Image by Sabrina Jiang © Investopedia 2021*

Some other [technical indicators](https://www.investopedia.com/terms/t/technicalindicator.asp) also make use of net change in calculating trend strength and other factors that help traders identify potential trading opportunities.