The price of a security (e.g., a stock) that drives the decision of a market participant to sell or buy it. It is the price at which a participant decides to trade at the market. The most common decision price is the close price or the arrival price. Typically, decision price comes in the middle of the bid-ask spread, though it may also be any price away from that point.

The decision price is a key component in the calculation of a trade’s implementation shortfall (which is used as indicative of the quality of the trade execution). Implementation shortfall is the difference between the decision price and the actual implemented or execution price.