What it means
When the market opens, the first trade sets both the high and the low for the day. As trading goes on, the low is updated every time a trade happens at a price below the previous low.
By the close, today's low is the cheapest price at which anyone actually bought or sold during the session. The number is a fact of the day so far, not a forecast.
It can only stay the same or move lower while the session is running, and it becomes final at the close. Many quote screens also show the 52-week low, which is the same idea over a longer period.
Traders and investors watch the low for several reasons. A price that falls to the day's low and then bounces back may suggest that buyers are stepping in at that level.
A price that keeps setting fresh lows through the day shows persistent selling pressure. The low also serves as a practical reference point for orders.
Some traders place stop-loss orders, which are instructions to sell automatically if the price falls to a chosen level, just below the day's low, on the idea that a break below it signals a weaker trend. Others use it to judge whether the price they paid was fair relative to the day's range.
There are some points of caution. Extended-hours trading, before the market opens and after it closes, may or may not be included in the low, depending on the data provider.
A single odd trade, sometimes called a bad tick, can also set a misleading low, so exchanges and data vendors sometimes correct their figures later. For a finance professional, the low matters when checking the quality of an execution.
If a broker reports a purchase at a price below the recorded low for the day, something is wrong. The same is true of a sale above the recorded high.
In practice
Real-world examples.
Example
A day trader sees a share drop to $24.00 and then bounce. The trader buys at $24.10 with a stop order just below the low at $23.95, so that the loss is limited if the low breaks.
Example
A company treasurer is converting dollars to euros for a supplier payment and checks the day's range for the currency pair. Seeing that the rate is close to today's low for the euro, the treasurer decides it is a good time to buy euros, and executes the trade.
Example
A compliance officer reviews a client's complaint about a poor sale price. The officer compares the execution price with the day's recorded high and low, and finds that the sale took place within the range, close to the middle.
Formula
Calculation
Distance above the low (%) = (current price - today's low) / today's low x 100
Suppose a share has traded as low as $24.00 today and is now trading at $24.60.
Distance above the low = (24.60 - 24.00) / 24.00 x 100 = 0.60 / 24.00 x 100 = 2.5%.
If the share had a high of $25.20, the day's range would be 25.20 - 24.00 = $1.20, and the current price would sit 0.60 / 1.20 = 50% of the way up that range.Case study
Seen in the real world.
Westmoor Capital is an illustrative, fictional asset manager that buys shares for its clients in large orders. One morning the portfolio manager noticed that a share she wanted had fallen sharply on a rumour, hitting a low of $42.00 after opening at $45.00.
Instead of buying the full order at once, she split the purchase into four parts across the day and monitored the low as a guide. The price recovered to $43.50 by midday and she completed the purchases at an average of $43.00, which was $2.00 below the opening price.
The illustrative saving on a 50,000-share order was 50,000 x $2.00 = $100,000 compared with buying at the open. She also recorded that the price had never gone back below the day's low, which she took as a sign that the rumour was being treated as overdone.
Watch out
Common mistakes.
- Treating today's low as a guaranteed floor, when prices can and do break below it.
- Forgetting that the low can still change while the market is open, since it only becomes final at the close.
- Ignoring whether the data includes extended-hours trading, which can make two sources show different lows.
Questions
People also ask.
What is the difference between today's low and the 52-week low?
Today's low covers only the current session, while the 52-week low covers the lowest price over the past year.
Does today's low include trading before the market opens?
It depends on the data provider, because some include pre-market and after-hours trades and others show only the regular session.
Why does my broker show a different low from another website?
Differences in the trades included, such as extended hours or small off-exchange trades, can cause small variations.
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