The Last Traded Price (LTP) is considered the most important price indicator in the share market, as it gives investors an idea of the security’s current market value.
LTP in the stock market is determined by the last trade in the market and is usually different from the security’s opening or closing price. It is important to note that the LTP is not necessarily the same as the security’s current market value, as it only reflects the price at which the security was last traded.
To understand the LTP meaning better keep on reading!
When we define LTP meaning in the share market, it is the value or price where the last trading took place. It provides information on the daily volatility of the stock price. The latest traded price fluctuates from day to day as a result of daily price fluctuations.
The flexibility of the market, demand, and supply influence the most recent traded price. The LTP changes continuously during the day. LTP marks the closing price when the trading hour ends. The stock exchanges’ websites provide access to the LTP of shares.
Whenever a deal is profitable, the LTP always climbs. LTP cannot be utilized as a reliable, guaranteed method of determining the stock’s future selling price because it is only active for a short time or sometimes even less. However, based on a stock’s prior trading activity, LTP might be used to determine the price at which it is regarded and to predict the potential range of a stock.
How is LTP calculated?
LTP is calculated in real-time and changes continuously during the trading day. Every time a transaction occurs, the price is changed or revised. The LTP is affected by several variables, including market liquidity, demand, and supply.
The share’s trading volume significantly influences the latest traded price. The trading volume reveals how many trades occurred over a certain time frame. A larger trading volume indicates that the share is very liquid and that many people are interested in purchasing it. Conversely, a low trade volume indicates more sellers than buyers. The price movement of the stock is influenced by its trading volume.
Significance of LTP
Forecasting stock price
LTP is a crucial factor in stock price forecasting. You may determine the trend of the security price with the use of LTP. The LTP can inform trading decisions by intraday and options traders.
Assume that three stock X sellers have set their asking prices at Rs. 100, Rs. 150, and Rs. 205. When the buyers of this stock discover that no more sellers are willing to sell it for Rs. 100, they may boost their price to Rs. 150. Stock X’s price has now risen to Rs. 150. The third seller would lower his ask price to Rs. 150 based on the most recent traded price if he didn’t find any customers at Rs. 205.
In a real stock market, hundreds of these deals are made at once, and the price changes according to how many are made. Consequently, the LTP measures how prices are moving in real-time.
Identify the right ask and bid prices
The most recent traded price reveals the amount a purchaser or buyer was willing to pay for the share. The selling price and the bidding or purchasing price will be in identical ranges with the aid of LTP, making it simpler to create a market order.
There is no assurance that sellers and bidders will be able to make a deal at targeted pricing, though, because of how the stock market swings.
The LTP is one of the most crucial parameters to consider while conducting short-term trades. Therefore short-term traders utilize it to make stock market trades.
The LTP in the stock market provides extensive information about a stock. It assists you in analyzing the daily price fluctuation of the stock and in making future price predictions for the shares. It is a crucial measure to consider when determining the stock’s worth.
LTP aids investors in determining the value of a certain stock and if its shares have historically generated the anticipated returns on investment. LTP should only be considered to understand how prices act and how the stock market fluctuates.
Note that the LTP is not the value at which stock is sold, a fact that most people outside the financial industry are probably unaware of. It just serves as a rough guide to the state of the market at any particular time. Almost always, the price of the original sale is different.
Thus, only base some of your investment choices on LTP. To make wise choices, be careful to consider your risk tolerance, investment goal, and investment timeframe.