LTP in Share Market
The whole concept of stock markets is based on the varying prices of stocks over time. The commodities traded on the stock market have what is known as the LTP or the Last Traded Price of the stock. This indicates the most recent price that the stock was bought and/or sold at. The LTP meaning resides in its variations, as the LTP of stock varies throughout its lifetime.
How is LTP calculated?
LTP is described as a commodity in which the price is set by the stock traders (Consumers) wherein both the seller as well as the buyer are considered consumers, as they are traders in the stock market. When a trader wishes to sell their shares, they will place a sell order (based on the current price and performance of the share) for the desired price. If this sell order is met by purchase order by another trader, the sale is complete, and the price at which the stock was sold, becomes the last traded price.
Trading volume plays a key role in determining the LTP in the share market. It is essentially the amount or quantity of the given stock that is being traded at any given time. The trading volume helps determine and affects the volatility of the price of a stock, and therefore its LTP in the share market as well. If a stock has a higher trading volume, this means that there exists an increased number of buyers and sellers whereas if the trading volume is lower, fewer orders are being placed and any transaction across the price range of the stock will have a strong impact on the volatility of the stock.
Importance of LTP
LTP in the stock market functions as a base price based on which traders can place their ask and/or bid prices. Determining and knowing the LTP in the stock market for a given stock is one of the most essential pieces of information a trader requires. Many trading websites offer market depth tables that show you the history of the prices the stock was traded at most recently. This information of the various LTPs of stock can aid you in establishing trends in the price of a stock and of the LTP in the stock market to trade accordingly.
There is always a doubt whether the closing price of a stock is also the Last Traded Price of the stock. Technically, the last traded price of a stock is also the closing price of the stock, meaning they are the same. However, trading volumes play a key role, especially in the concluding hour of the trading day. Stocks tend to be heavily traded in the final moments of the markets and due to the sheer amount, orders are often processed minutes after the market has closed. Therefore, while the closing price accounts for orders placed before the market closed, it does not apply for those processed after closing time.