As a stock market investor, you will come across many terms and jargon that can seem simple to look at. However, it is important to ensure that you understand all these terms well before making an investment decision based on them. One such term is LTP - the full form Last Traded Price.
Published on 11 January 2023
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In this article, we will discuss the Last Traded Price or LTP in stock market and share everything that you need to know about it to make an informed investment decision.
What is LTP in Share Market?
Before we decode the LTP meaning, let’s discuss how the price of a share is determined in the stock market.
To understand the price at which a stock is traded in the market, you need to understand the concept of Ask Price and Bid Price:
Ask Price: This is the lowest price the seller of a stock wants for a share
Bid Price: This is the highest price the buyer of a stock is willing to pay for a share
Let’s say that a seller wants to sell the stock of a company ABC Limited at ₹100 per share. Therefore,
Ask Price = ₹100
A buyer enters the market and is willing to pay a maximum of ₹90 for the stock. Therefore,
Bid Price = ₹90
Since the Ask Price and Bid Price don’t match, the trade does not take place. After some time, another seller enters the market and asks for ₹90 per share. Therefore,
Second Ask Price = ₹90
Since, Second Ask Price = Bid Price, the trade is completed.
The price at which this trade happens is known as the Traded Price.
In the stock market, thousands of trades take place every second. Hence, the traded price of a stock can keep changing as per the demand and supply of the stocks. The price at which the stock was traded last is known as the Last Traded Price or LTP of the stock.
The impact of trading volume on the Last Traded Price of a stock
Trading volume plays an important role in the determination of the LTP of a stock. Trading volume is the total quantity of stock being traded at any given time. It is the sum of buyers and sellers in the market for a particular stock.
When the trading volume is high, i.e. there are multiple buyers and sellers of a stock, the Ask and Bid prices are closer to the Last Traded Price. On the other hand, if the trading volumes are low, then there are usually few to no buyers for the stock. Hence, the Ask Price tends to fall to the Ask Price, resulting in a lower LTP.
Significance for LTP in Stock Market
As a stock market trader, knowing the Last Traded Price of a stock is an important piece of information as it tells you the last price that a buyer was willing to pay for it. Hence, it can act as the base price in which you can place your Ask Price or Bid Price.
For example, if the LTP of a share is ₹100 and you expect the share price to fall, then you can place a Bid Price of ₹95. On the other hand, if you expect the price to increase, then you can place a Bid Price at ₹102-₹103 to account for the price change between the time you place the order, and it gets executed. Also, you can analyze various LTPs of a share to spot trends and take positions accordingly. Also Read: How To Invest In Share Market?
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To be a successful share market investor, you need to understand various investment options available to you like shares, bonds, debentures, etc. Of these, shares offer an opportunity to earn good returns on your investments. However, before you start your journey as a share market investor, it is important to understand what you are investing in.
When you buy or sell shares in the share market online, there are many costs that you need to be aware of, like brokerage, STT, stamp duty, GST, etc. While most of these charges are the same across brokers since they are determined by the regulator or the government, the brokerage is one cost that can vary. In this article, we will talk about brokerage in the share market and help you calculate it, and offer an online stock trading brokerage calculator for your ready use.
There are around 9 stock exchanges in India offering a secure trading platform to investors. These include the National Stock Exchange (NSE India), Bombay Stock Exchange (BSE), Calcutta Stock Exchange (CSE), India International Exchange (India INX), Multi Commodity Exchange of India (MCX), National Commodity and Derivates Exchange (NCDEX), Indian Commodity Exchange Limited (ICEX), Metropolitan Stock Exchange of India Limited (MSE), and National Stock Exchange IFSC Limited.
To be a successful share market investor, you need to understand various investment options available to you like shares, bonds, debentures, etc. Of these, shares offer an opportunity to earn good returns on your investments. However, before you start your journey as a share market investor, it is important to understand what you are investing in.
When you buy or sell shares in the share market online, there are many costs that you need to be aware of, like brokerage, STT, stamp duty, GST, etc. While most of these charges are the same across brokers since they are determined by the regulator or the government, the brokerage is one cost that can vary. In this article, we will talk about brokerage in the share market and help you calculate it, and offer an online stock trading brokerage calculator for your ready use.
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