LTP in Share Market

The most recent price at which a specific stock was traded on the stock exchange is known as the Last Trading Price (LTP). This price indicates the value at which the stock last changed hands and represents the most recent transaction between a buyer and a seller. LTP is a real-time figure that is subject to sharp fluctuations when trading activity is ongoing during the trading session. In this blog, let’s explore what is LTP, its importance, value and more.

Key Highlights

• LTP represents the most recent price at which a stock was bought or sold in the market.

• It provides real-time information about a stock’s current market value and trading activity.

• LTP is crucial for day traders and algorithmic trading systems to make quick decisions.

• It’s used to calculate intraday gains or losses and to trigger stop-loss orders.

• LTP can differ from the closing price if trades occur after regular market hours.

How is LTP Calculated?

The LTP does not need to be manually calculated. Usually, it can be found on the trading screen near the concerned stock. Since the LTP for liquid stocks fluctuates every second, certain apps may additionally use the most recent change’s colour to represent LTP; an increase in price would be shown in green, while a reduction in price would be shown in red.

The market requires three parties in order for the LTP to be updated:

• Sellers are prepared to accept a specific price for the shares

• Customers prepared to pay a specific price

• The marketplace that connects suppliers and buyers at the agreed-upon pricing

Real-time LTP calculation is done by the exchange. They accomplish this by matching buyers and sellers. The latest transacted price is automatically updated when these two parties agree on a price, which occurs multiple times each second.

Significance of Last Traded Price

The following are the importance of LTP in the Stock Market:

LTP Predicts Stock Price

The LTP is crucial to predicting things like stock price moves. You can better understand this by looking at the following example:

Let’s say three sellers of stock A asked for Rs. 100, Rs. 101, and Rs. 105. Initially, buyers accept the rate of Rs. 100, but once they realise there are no more sellers at Rs. 100, they might bid Rs. 101. Stock A now costs Rs. 101. If the third seller didn’t find any buyers at Rs. 105, he would lower his ask price to Rs. 101.

There are hundreds of these trades happening simultaneously on the stock market, and the price fluctuates depending on the volume. So, LTP shows real-time price movement.

Establish the Appropriate Price For the Ask And Bid

The LTP makes it easier to place a market order because the selling or asking price and the bidding or buying price will be in similar ranges. However, as the stock market fluctuates, there is no guarantee that sellers and bidders will be able to execute a trade at the desired price.

Value of LTP in Share Market

You might think of a stock as a way to purchase the company. The decision could not be very valuable, particularly if it involves a tiny or risky company. However, its value will usually increase with time.

The reason is that businesses eventually go out of business and are replaced by other businesses with their assets (capital, factories, and patents). In the event that the business is acquired or goes public, you are entitled to a portion of the proceeds if you own the stock.

If the company is more well-known, this is more likely to occur. If you possess Microsoft stock, for instance, you can probably count on someone at some point offering you money for your shares, even if you never sell them. All that a Microsoft share entitles you to is a portion of the company’s ownership, not the ability to purchase or sell anything. The price at which someone was ready to wager that the company will increase in value in the future is represented by the most recent traded price.

Almost invariably, the real sale is made for a different amount.

If you purchase 1,000 shares of Microsoft, for instance, the sale price will be $26 per share. Alternatively, if you purchase 100 shares of a penny stock, the difference could be substantial.

Basic economics is the cause of this. Nobody wants to sell all of their Microsoft shares at the market price when they purchase 100 of them; if they were, they could enter an exchange and sell their shares there without having to pay fees.

Additionally, the sellers don’t care who they sell to. They would rather sell to a knowledgeable customer who is not willing to play about it.

The price at which a stock is sold is different from its last trading price, something that most people don’t know unless they work in finance. It is merely a rough representation of the current state of the market. For a lower price than they believe it’s worth, they would rather sell to someone who knows what they’re doing and doesn’t want to mess around. They therefore hold off on selling until someone shows up who is prepared to pay more than the price of the most recent trade.

Conclusion

The Last Trading Price (LTP), which is based on recent trading activity, is a significant measure of a stock’s current worth in the share market. Due to its real-time nature, it is extremely helpful for traders and investors who want to make well-informed judgments in a volatile market. Investors can improve their ability to manage the complexities of the stock market and possibly profit from market opportunities by comprehending the importance of LTP and how it relates to other metrics like trading volume and closing price.

FAQs on LTP in the Share Market