Our main objective will be to get you guys familiar with the term LTP (Last Traded Price) in the stock market in this article. So now, let us begin this article by looking at what LTP is in detail. The Last Traded Price, also known as LTP in short, implies commodities or products bought latest at its current market price.
The LTP of all stocks fluctuates throughout its lifetime daily. If you observe the price of stocks during the trading hours, they fluctuate every second. LTP is just a tag for the last price at which any stock was traded. Let us look at LTP in a detailed manner.
What is the Last Traded Price (LTP)?
You might have noticed that the products you buy are labeled with MRP or Maximum Retail Price whenever you buy something. This MRP or Maximum Retail Price is the highest reasonable price on which the product can be sold. Selling products above a particular MRP is considered illegal and unethical.
Purchases made in the stock market work a little contrarily. The fundamental belief of stock markets and stock trading is established on stocks’ fluctuating prices over the period. Therefore, stocks cannot be labeled with an MRP. Instead of an MRP, commodities or stocks exchanged on the stock market are attached to the security’s Last Traded Price.
Now let us see how the Last Traded Price is calculated.
How is the Last Trading Price Calculated?
As I’ve mentioned earlier, LTP is different from the MRP of a product. LTP is set by the investors and the traders, whereas the government sets the MRP on a particular product.
If a trader wishes to sell a share, he will place a sell order (based on the recent price and interpretation of the share) for the price at which he wants to sell stocks. If a purchase order fulfills this sell order by a trader, the sale is finished. Thus, the cost at which the stock was sold comes to be the last traded price.
The essence of the para here is that the LTP is not stabilized and is entirely driven by the market’s emotions.
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What is Traded Volume?
A stock’s trading volume refers to the number of shares being bought and sold. Therefore, traded volume plays a significant role in predicting how close the current trading price will be to the LTP.
The bigger the volume, the less will be the volatility of the stock, which means that it is not prone to indicated swings in the price. Also, the greater volume gets, the smaller the stretch between the bid and ask prices increases.
In such a case, Sellers are more inclined to get a price near their ask price, and fairly buyers are more inclined to pay the price near their actual bid.
What is the Closing Price?
The “closing price” of stock refers to the last traded price at the end of the day. Particularly price movements of stocks are traced down by stock exchanges.
The majority of U.S. stock exchanges usually close at 4 p.m. Stock trading nowadays proceeds after hours. Only a few traders are active during those hours, which means a lower volume is generated. It is slightly plausible that you’ll have to pay the LTP accordingly.
Following day, the “opening price” of the stock is the price approved upon the first trade of the day.
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Significance of LTP in Stock Market
LTP has immense importance in the stock market. Traders must know how to determine LTP as it helps the trader to understand the stock movements.
The LTP in the stock market processes as the base price through which traders can place their ask or bid prices.
For instance, the LTP of a given share is 100 rupees. So investors can place an order at 95 only if they predict the price to fall. Likewise, an investor could also place an order at 100 rupees if he thinks that the stock price will rise.
We’ve discussed what is LTP in the stock market and some terminologies under Last Traded Price. Always keep one thing in mind that after each successful trade, the Last Traded Price progresses due to the market forces. The more it trades, the more volume it gains, the more it fluctuates.
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