Understanding Net Change: A Simple Calculation

Calculate net change

Net change is the difference between the current price of assets and the price of the asset on another day previous to that one. The most common "previous date" used is the date you purchased the asset or the last selling price. For stocks, traders use the term to refer to the difference between the price of a stock at the end of the current trading day and the previous trading day. We will calculate net change based on the definition provided by the investment community.

Step 1

Purchase the Wall Street Journal or Investors Business Daily from the bookstore, or go online to their websites. Go to the stock listings and look up the net change in the stock's performance. This is the change from day to day. Now let's calculate how they came up with this number.

Step 2

Look up the price the stock closed at on the previous day. The stock table will list this as "Previous Day's Close." Let's say the stock you are researching was $100 at closing yesterday (Previous Day's Close). To be clear, you need to look this number up for the previous day.

Step 3

Determine price the stock closed at on the following day. Let's say the price closed at $101. The net change is the difference between day one's close and day two's close; that is, $101-$100 = $1. The net change can be positive or negative, depending on the direction of the stock.

Tip

One common question asked by finance professors is to find the net change for a stock which just had a two-for-one stock split. This means that you will own two stocks after the split for every one you owned before. Students are quick to say 50 percent, however the real answer is 0 as the net change is a function of the price of the stock which has also split in half.