LTP full form is the Last Traded Price, which is the latest price at which a particular stock or security (such as a futures contract) was bought and sold on a stock exchange.
Knowing this real-time data is highly crucial, as it helps investors gauge stock price movement and determine the right ask and bid prices.
Understanding LTP with Example
For instance, there are three sellers holding stock A. The stock’s asking prices are ₹95, ₹101, and ₹110. At the initial stage, the buyers accept the rate of ₹95. But, they increase their bid from ₹95 to ₹101 when they realise no more sellers exist at ₹95.
Now, the stock price of A increases to ₹101. When the third seller did not find any buyer at ₹110, they would decrease their ask price to ₹101, depending on the last traded price.
Importance of LTP in the Share Market
- By having this real-time information, investors can make timely trading decisions. They also remain updated about the trends in the share market.
- Fluctuations in LTP in finance are a strong indicator of rapid price changes, which significantly impact the stock's price.
- Candidates involved in intraday trading need to know the LTP to take advantage of short-term price movements.
Generally, the stock exchange considers four factors when calculating LTP. They include time of trade, trade execution, market updates, and liquidity.
Remember, LTP and closing price are not the same. Though both are stock prices, LTP is the most recent price at which a share or contract was traded during the trading hours.
On the contrary, the closing price refers to the last stock price at which it was traded on the day's end.
