What is LTP in Share Market? How is it Calculated?

LTP in Share Market: An Overview

If you are new to the world of the stock market, understanding LTP along with other terminologies is important to trade in the stock market. LTP is often considered the closing price or market price by investors. But in reality, LTP is not as same as the closing price and market price. In this article, we are going to learn about LTP full form, the meaning of LTP in stock market, how LTP in share market is calculated and the importance of the last traded price in the stock market. 

What is LTP in the Stock Market?

The price of the stocks keeps changing on every trading day because the prices are determined by the demand and supply. When there is more demand than supply, the price of the stock increases. On the other hand, when there is more supply than demand, the price of the stock decreases. Buyers of the stock can buy the stock at the current market price or bidding price at which they want to buy. Whereas sellers of the stock sell the stock at the current market price or can set the asking price at which they want to sell the price. The stock exchange's job is to match the asking price and bidding price so that both buyers and sellers can get benefits. 

LTP full form in the share market is the last traded price. It is the price at which the last trade occurred. It tells you how much the stock price has fluctuated throughout the day. The last traded price varies from day to day because of the changing price movements on daily basis. The last traded price is based on the liquidity of the market and demand and supply. The LTP keeps on changing throughout the day. After the closing of the trading hour, LTP becomes the closing price.  The LTP of shares is available on the website of stock exchanges. 

To understand the concept of the last traded price in the stock market, let's understand the asking price and bid price. The asking price is the price at which the seller of the share wants to sell and the bid price is the price at which the buyer of the share is willing to buy. For example, a trader wants to sell the shares of a company XYZ at Rs. 150 per share. Hence, the asking price will be Rs. 150. On the other hand, a trader wants to buy shares of the company at Rs. 140. Hence, the bidding price will be Rs. 140. In this case, if the bidding price and the asking price doesn't match, the trade will not be accomplished. The trade will only be completed when the asking price and bidding price will be matched. Every second, thousands of trades take place in the stock market. 

Key Takeaways

• LTP is the price at which the stock was sold. 
• LTP of a stock can be seen on the website of stock exchanges such as NSE and BSE. Moreover, LTP can also be seen on various trading platforms. 
• The last traded price is also known as today's price. 

Meaning of LTP in the Stock Market: How's it Calculated?

LTP is measured on a real-time basis and it keeps changing every second through the trading day. The price changes whenever there is a transaction. The LTP is determined by various factors such as liquidity in the market, demand & supply. 

The trading volume of the shares plays a major role in deciding the last traded price. The trading volume shows the number of trades occurring in a period. A higher trading volume shows that the stock is highly liquid and there is a large number of buyers buying the share. Whereas when the trading volume is low, it shows that there is an increase in the number of sellers. The trading volume of the stock affects the price movement. Moreover, trading volume is a major factor to consider while doing short-term trading in the market. 

What is the Importance of LTP in the Stock Market?

• Predict stock price: LTP helps you to know the direction of the price of the security. Intraday and options traders can use the LTP to make their trading decision. 
• The last traded price tells you how much price a buyer was willing to pay to buy the share. 
• Based on LTP, you can place a market order as you can predict how the price of the stock will behave in the future. 
• Short-term traders use the last traded price to trade in the stock market because it is one of the most important metrics to consider while doing short-term trade.  

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To conclude, LTP in the share market helps you to analyze the price movement of the stock throughout the day and helps to predict how the price of the shares will move in the future. Also, it is an important metric to analyze the value of the stock. However, do not make your investment decision solely on LTP. make sure to analyze your risk appetite, investment objective, and timeline of your investment to make well-informed decisions.