The fluctuating prices of stocks over time are the foundation of the entire stock market concept. The Last Traded Price, or LTP, is what is used to describe the commodities traded on the stock market. The most recent price at which the stock was purchased and/or sold is shown below. Since the LTP of stock changes throughout the course of its existence, we can find its variations are where its significance lies. In this post, let us discuss what is LTP in the share market. Let us also know the full form of LTP.
Early speculators would assess the price movement based on both the historical price performance of a product and its projected price in the future. As new technologies emerged in the world of financial trade, this practice went through additional development. Traders started to express prices on the stock market in days rather than weeks in the 1800s. We can thank in part floor traders. Then traders started to take hourly measures with the advent of telegraph tubes in the 1930s. Then we saw the use of lower timeframes at the beginning of the stock market’s transition to electronic trading in the late 1990s.
LTP Full Form
The full form of LTP is the Last Traded Price.
LTP is referred to as a commodity whose price is determined by stock traders (consumers). Here both the seller and the buyer are consumers because they are stock market traders. When a trader wants to sell their shares, they will submit a sell order for the target price (depending on the share’s performance and current price). The transaction is complete and the price at which the stock was sold becomes the last traded price if this sell order is matched by a purchase order from another dealer.
Learn What is LTP in Share Market
Before determining the role of LTP (Last Traded price), it is important to comprehend what LTP in the stock market means. The term “LTP” in the context of the stock market refers to the most recent price at which a stock is trading on a stock market or stock exchange. The following characteristics of LTP in shares:
- The last traded price of a stock is indicated by the historical number known as an LTP.
- The LTP of a specific stock depends on how the market feels about it.
- LTP’s market value is reliant on its changes.
- LTP is a volume-sensitive indicator. The closer the real price is to the LTP, the more trading volume a specific stock experiences.
- LTP functions as a constant price index, updating with each minute’s change in a stock’s price.
- LTP is not a reliable indicator of price; it is merely an estimate.
What is the Activity of LTP (Last Traded Price) in the Share Market?
We can now talk about LTP’s functions since we understand what it signifies. The following are some of LTP’s stock market functions:
The price of any stock depends on the auction process in the exchange. Any stock’s LTP acts as its base price, the threshold above which traders set their ask and/or bid prices.
LTP and Trading Volume
The trading volume heavily influences the share market’s LTP. It basically refers to how much of a particular stock is trading at any one moment. The share market’s LTP as well as a stock’s price volatility are both influenced by and depend on the trading volume. A stock with a larger trading volume indicates that there are more buyers and sellers than a stock with a lower trading volume. This indicates that traders are placing fewer orders in this stock. Any transaction across the stock’s price range will have a significant impact on the volatility of the stock.
Pictorial Explanation of What is LTP in Share Market
To produce market-depth information, traders plot the LTP. This information reveals the price value history of specific stocks and traders can utilize this to construct or buck price trends for those equities. Check the image below to understand the plotting in the 5-minute time frame.
- Investors use LTP to determine whether or not a particular stock is worthwhile to invest in.
- Investors utilize LTP to monitor changes in the stock market and its pricing.
What is the Difference between the Closing Price and the LTP?
So, we have understood LTP in full form and what is LTP in the share market. So let us now check the difference of it with the closing price. LTP and closing price are frequently interchangeable because a stock’s LTP at the end of trading is also its closing price. However, there is a significant distinction between LTP and a stock’s closing price.
While we can determine LTP by taking into account the previous transaction regardless of market time, the closing price of a stock does not account for stock transactions that occur after the market has closed. The closing price is the LTP of a particular time frame (1 day or 1 hour etc).
LTP serves as a base price for traders to base their ask and/or bid prices in the stock market. One of the most crucial pieces of information a trader has to know is the LTP in the stock market for a specific stock. Market depth tables are available on many trading platforms, and they provide a history of the most recent prices at which the stock trading took place. This knowledge of the numerous LTPs of stocks can help you identify trends in a stock’s price and of the LTP in the stock market to trade in accordance with those trends.
One of the most important indications for a trader or investor on the stock market is LTP. Investors can develop precise predictions of stock market swings and execute transactions accordingly by combining LTP with other indicators. Because of this, it’s critical for investors to understand the nature and purpose of LTP.
It’s never certain whether a stock’s closing price corresponds to its last trade price. Technically speaking, a stock’s closing price and last traded price sometimes are identical, making them the same. Nevertheless, trading volumes are important, particularly in the last hour of the trading day. In the last minutes of the market, stocks are frequently heavily traded. Because of this volume, orders are frequently filled minutes after the market has closed. As a result, while the closing price takes orders entered before the market closed into consideration, it does not apply to orders completed after the market closed.