What is the LTP full form?

LTP stands for Last Traded Price. It refers to the price at which the stock was last bought and sold.

What is the LTP in stocks?

LTP in stocks stands for the Last Traded Price. It indicates the most recent price at which the stock was bought or sold.

How is LTP calculated?

You don’t have to calculate the LTP manually. It is usually available on the website of stock exchanges like NSE and BSE. You can also see this information on your broker platform against the security.

What are ATP and LTP in the share market?

LTP is the latest price at which a stock was bought or sold. This indicates the price movement on a real-time basis. On the other hand, ATP is the Average Traded Price, which indicates how much buyers have paid for one share on average over the course of a specific time.

Are LTP and closing price the same?

No. LTP represents the actual last traded price of a stock. However, the closing price is the stock’s weighted average of the last 30 minutes of trading.

How to trade with LTP?

Using the LTP in the share market starts with observation. Compare it with bid and ask prices. Watch how often trades happen near it. Sudden movement away from LTP often signals urgency. Use it alongside volume and order depth before acting.

What is LTP in Share Market? Importance & Calculation

Taking the time to understand the stock market terminologies can be rewarding. It helps you understand the concepts of trading and investing, forming a foundation for your stock market journey. LTP is one such terminology that investors confuse with the closing price. However, these are two entirely different terms. In this article, let’s discuss the LTP meaning, its full form, and its significance in the stock market.

Key Takeaways

LTP, or Last Traded Price, shows the exact price of the most recent trade and updates continuously during market hours.

LTP reflects real-time demand and supply, helping traders gauge short-term price direction and current market sentiment accurately.

High trading volume keeps LTP closer to fair market value, while low liquidity can cause wider price swings and gaps.

LTP differs from the closing price, which is calculated later using VWAP during the final minutes of trading.

LTP Meaning

Stock prices are never static. They continually rise or fall in response to demand and supply among buyers and sellers for that specific stock. Sellers set the asking price of a stock at the rate at which they are willing to sell their shares, and buyers bid on it by offering a price they are willing to pay, also known as the bidding price. The stock exchanges match the rates, and both parties arrive at a mutually beneficial price. The price at which stock is sold is the LTP, short for Last Traded Price.

LTP is measured in real time and changes throughout the trading day whenever a transaction occurs. The LTP is determined by various factors such as liquidity in the market, demand and supply. It denotes the price at which the last transaction or trade occurred. It is essential to determine how stock prices will fluctuate in the future. It is also a reliable metric for assessing the value of the stock and how its prices have fluctuated in the past.

However, the LTP changes with every successful trade and is active only for a fraction of a second or less. As such, it cannot be used as a foolproof measure for setting the future selling price of the stocks. However, LTP could be used to derive the value at which a stock is perceived and to estimate the possible range of a stock price based on its past trading history.

Also Read, Supply and Demand Trading - Strategy, Rules etc

The real-time computation of the last traded price (LTP) is an intricate process, constantly updating on the trading screen in response to the ongoing transactions involving the corresponding security. LTP, being contingent on each transaction, holds significance solely within the confines of the particular trading session or day.

The emergence of the last traded price is intricately tied to the liquidity of the market, a key metric denoting the frequency of security trades, often occurring multiple times per second. In a market characterised by high liquidity, where securities are traded frequently, the bid-ask spread is minimised, closely mirroring the authentic market price.

Prices listed on exchanges typically fluctuate in increments or decrements, a phenomenon commonly referred to as the ‘tick size’, which varies depending on the price range. A narrow bid-ask spread not only signifies a liquid market but also facilitates traders in entering and exiting positions with minimal slippage.

Conversely, an illiquid market witnesses infrequent trades, leading to a broader price range for the security. This scarcity of transactions in an illiquid market complicates price discovery, potentially resulting in a significant deviation of the last traded price from the market price.

Also, learn What is Fair Value Gap here.

How to Estimate the Last Trading Price of a Stock?

You cannot estimate the last trading price as it is the price of the most recent trade in the market. Every time a buyer and seller agree, the price updates. If trading is active, the number keeps changing. If trades slow down, it stays the same. The LTP in the share market does not show future value or average cost. It only shows what the market accepted a moment ago. Think of it as a snapshot, not a judgement.

Also, learn What is Haircut in Share Market here.

The Role of Trading Volume in Determining LTP

The trading volume of stocks, or the number of shares being bought and sold, is a valuable metric in determining the LTP. It plays a crucial role in estimating how close the asking price should be to the LTP. When trading volume is higher, stocks are less volatile because they are less prone to significant market fluctuations, which indicates that buyers and sellers can mark their shares at the desired ask and bid prices.

Another thing to note is that an LTP can only be determined if an actual transaction happens. It is merely a matter of the last price at which investors traded stocks.

Also, learn What is Property Dividend here.

Significance of LTP

The following are the importance of LTP in the share market:

Predict The Stock Price Movement

LTP is critical in determining attributes such as the direction in which the stock prices move.

Say, for instance, three sellers of stock X have asked for a price of ₹100, ₹101, and ₹105. The buyers for this stock initially accept the rate of ₹100, and once they realise there are no more sellers at that price, they might increase their bid to ₹101. The price of stock X now increases to ₹101. The third seller, not finding any buyers at ₹105, would bring down his ask price to ₹101 based on the last traded price.

In an actual stock market, hundreds of such trades are executed simultaneously, and the price fluctuates depending on the volume of these transactions. So LTP is an indicator of price movement in real time.

Determine The Appropriate Ask/Bid Price

With the help of LTP, it is easier to place a market order, as the selling or asking price and the bidding or buying price are in similar ranges. However, as the stock market fluctuates, there is no guarantee that the sellers and bidders can execute a trade at desired prices.

Using LTP in Your Trading Strategy

LTP serves as a real-time trading indicator in tandem with traded volume for your trading strategies-

LTP Trend	Traded Volume	Signal
Up tick	Up	Bullish
Up tick	Down	Mild bullish with caution
Down tick	Up	Mild bearish with caution
Down tick	Down	Bearish

Difference Between LTP and Closing Price

The significance of the last traded price (LTP) is confined to the specific trading session of the day. As the trading day concludes, the LTP transforms into the closing price. However, it's crucial to note that these two metrics differ significantly and should not be used interchangeably. LTPs serve as real-time indicators for price discovery.

In contrast, the closing price is derived from a computation involving the volume-weighted average price (VWAP) and LTPs during the final 30 minutes of trading before the session concludes. Consequently, the closing price is not immediately available, as it requires time for the calculation based on this specific timeframe.

The VWAP or closing price is obtained by considering prices and corresponding volumes at different price points. This approach allows traders to assess the attractiveness of a security's price by comparing it with the demand. The closing price formula involves calculating the cumulative (price * volume) divided by the cumulative volume.

Exchanges, including those in the Indian stock market, mandate the timeframe (last 30 minutes) and formulae for publishing the closing price, ensuring consistency and reliability in capturing trading data for this very crucial metric.

What is the Effect of LTP on Stock Prices?

The LTP in stock affects how new orders get placed. Buyers often bid near it. Sellers' price offers around it. If trades keep happening above the LTP, prices may drift upward. If trades cluster below it, prices may slide. Over time, repeated activity around certain LTP levels forms zones where prices pause or reverse. LTP guides short-term movement, not long-term value.

Conclusion

A lot can be derived about a stock based on its LTP. The LTP helps investors determine whether a given stock is worth investing in and whether the shares have returned expected profits to

What is LTP in Share Market?