LTP is the Last Traded Price in the stock market comprising the buyers and sellers that agree on a common price. The common price represents the intrinsic value of the asset. It is important to note that when both buyer and seller agree on a price, this price is the LTP's Last Traded Price of the share, and the trade occurs.
In this article, you will learn how LTP is calculated using LTP Calculator. Before moving on, let's look at the Last Traded Price.
Published on 02 March 2023
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What is the Last Traded Price?
The concept of the Last Traded Price in the share market is based on price and volume at specific times. Several transactions at different prices occur in the stock market on a single trading day, and the Last Traded Price is determined based on the stock's opening and closing price.
The LPT or Last Traded Price is the price at which the last trade took place in a particular stock at any given time. It differs from stock to stock and at different times.
Importance of the Last Traded Price
The last traded price in the share market helps investors or traders to decide at what price they can buy or sell orders. There are high chances of the trade order getting fulfilled when the price quoted by the buyer or seller is nearer to the LTP. Various LTP can help determine the stock's price trend on that particular day of trading. Furthermore, LTP helps in predicting price movements as well.
How is the LTP Calculated?
The Last Traded Price is the price set by the traders, where both the seller and buyers are the traders or consumers. When a trader wants to sell the shares based on the performance and the current price of the share, a sell order is placed. If this sell order is in sync with the purchase order by some other trader, then the sale is known to be complete, and the price at which this stock is sold becomes the LTP, the last traded price.
For every trade in the stock market to occur, it must contain
During trading hours, the current owner of the shares offers a selling price, also known as the ask price. However, other individuals are looking to buy stock with a bid price. The exchange is only allowed to take place or occur when the bid price and the ask price match. The price at which this trade occurs becomes the basis for the Last Traded Price calculator for that specific time.
For example, to understand the LTP Calculation better, we can use an example such as
Suppose a seller wants to sell a company's stock at Rs. 10,000. Therefore, the ask price, in this case, is Rs. 10,000.
A buyer wants to buy a stock at a maximum price of Rs. 9,500. Thus, the bid price in this case is Rs. 9,500.
Now that the bid price and ask price are different, no trading can occur during this particular time. Nevertheless, a new seller enters later during the same day and is willing to sell the stock at Rs. 9,500. Thus, the latest ask price becomes Rs. 9,500.
Since the second price is the price at which trade occurs successfully, it is known as the LTP (last traded price).
It is important to note that thousands of traders can be present in the stock market during trading sessions. Therefore, the stocks with higher liquidity keep changing their prices as per the stock's demand and supply. However, the price at which the stock was last traded is known as the stock's last traded price.
The Impact of the LTP Calculator on Share Price
The LTP is a major factor that investors may consider before they buy or sell securities. Trade orders are to be fulfilled when the ask price and bid price are near the LTP's last traded price. Therefore, it is essential that buyers and sellers observe the Last Traded Price carefully and, after that, quote prices accordingly.
However, if they quote the ask/bid price above or below the LTP, they would have to adjust the prices after looking at the last trade price range of a specific trading session.
Option LTP Calculator
The LTP should not be confused with the closing price, as they differ significantly. This difference between the Last Traded Price and the closing price is called the Option LTP calculator. The closing price is based on the average price for the trades that took place during the last half-hour trading period in India, i.e., 3 p.m. to 3:30 p.m. Also, if there have been no transactions in the last half an hour of a particular trading day, the closing price and the Last Trading Price would be the same for that day.
Conclusion
It is essential to know that the Last Trading Price at any given point in time is the price at which the latest or last trade occurs between the sellers and the buyers. The sellers and buyers may also consider the Last Traded Price to decide at which price exactly they need to trade a particular stock.
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