There are so many things in the stock market that we are not aware of, wouldn’t you agree? Today, investors use multitudes of tools and indicators over so many different factors. But that is needed, given the volatility of the stock market and ways to make it to the top. The stock market could be a scary place when we look at the risks that are associated with it. On the other hand, it could also look like paradise with excessive amounts of returns.
But, when speaking facts, every investment could not be a success; even Warren Buffet himself would not have seen an “every single time success.” Among the several things that you need to know about the stock market, now we are going to talk about the calculation of the price of a stock.
What is the Meaning of the Daily Price of a Stock?
The value of your investments changes on a daily basis as stock prices fluctuate. You may track the magnitude of this change by calculating daily stock returns. The daily return is a percentage of the previous day’s closing price that measures the change in a stock’s price. A positive return indicates that the stock has increased in value, whereas a negative return indicates that it has decreased in value. A stock with lower positive and negative daily returns is considered to be less hazardous than one with higher daily returns, which results in larger price fluctuations.
How to Find the Daily Return of the Stock?
Here are some steps that you can follow to calculate the daily stock returns:
- Go to Financial Website that Would List Stocks:
Search for a stock or finance website that lists stock information in a web browser. Look for a search field on the webpage where you may look for a company. You can use this trick to trade and invest in Stocks too. All financial websites should have the same information because they all get their data from the stock market, and you would not be confused.
- Always Use the Ticker Symbol with the Name:
For trading purposes, a stock ticker symbol is a unique set of letters allocated to a firm. Every publicly traded corporation has one. To look up your firm’s stock information, type their ticker symbol or Name into the company search section. This will ensure that you, by mistake, do not end up looking up another stock with a similar name.
- The Data you Look up Needs to Include Adjusted Closing Prices:
Look over the information whenever you pull up the data to see what it contains. Locate the “adjusted closing prices” data to aid in the calculation of your daily returns. Some websites may just show the estimated closing price rather than the adjusted closing price. Try checking for the company on another finance site if it doesn’t have the updated closing prices (which have been adjusted to be completely correct).
- Download the Information for the Period you Want to Refer to:
Choose the option to download the data if you plan to manually calculate and track your daily stock returns. Save it on your computer so that you may refer to it and get the information you require. Simply ensure that the data contains the modified closing prices. If you’re trying to keep track of your stocks over time, downloading the data may be useful.
Now, let’s get to how to calculate the daily stock return, shall we?
The Process of Calculation of the Daily Stock Return
Here is how you do it:
- Get the information that you have downloaded, and look up historical prices.
- Identify the closing prices in the data, and then you will have to locate the closing prices of the last two days.
- Now, you will have to identify the opening price of the stock and the closing price of the stock. You will have to find the difference between the two, which means you will have to subtract, and now you will see the daily return.
- Identify the total stocks, those that are known as shares you own from the business. Get the difference between the opening and closing stock, and now multiply it with the shares that you own to ensure exactly how much the stock has increased in value today.
- If you are looking forward to finding the percentage of your stock’s everyday return, then take your daily return and divide it by the current stock price. You can take that value and multiply it with 100 to know the percent of the return.
Now, there is a major difference between finding the prices online and calculating them all by yourself. For the first part, you would not be doing any manual calculation; all you would be doing is research.
For the second part, you will be doing some manual calculations and not a lot of research.
Or, you can do both and measure the returns of the two-match – which will give you more clarity and assurance.
The Bottom Line
There is also a third way you could do this – you can simply use an online calculator. You do not just have to calculate the daily returns; you can also choose to do it for a week or even a year to evaluate the stock in the long term.