Many people interested in the share market still do not know what LTP is, and they keep searching for the answer for the same. The prices of the shares always keep changing, and the prices per share can change every day. They always keep moving upward and downward and change instantly, even in minutes. And whenever the investor or trader looks for the share, they first check out the LTP or Last Traded price of that company’s share.
The sellers fix their prices to sell the shares, and buyers also determine the prices to buy those shares. And these prices are known as bidding costs from the buyer’s perspective. To fix the bidding cost, the buyer needs to know the LTP or Last Traded Price and to know what the Last Traded Price is, read this post as here you will get a complete explanation.
What is LTP (Last Traded Price)?
The LTP or Last Traded Price stands for the value of the stock or the share on which it was traded for last time or exchanged in the stock market. It is the amount of the share and is based on the share’s history price. So, to conduct valid measurements, it is essential to know the LTP of the share and the recent fluctuation in its market value. Generally, the LTP changes on every shift or the transaction that takes place while doing trading. As the LTP keeps changing even in seconds, it should not be considered to find out the ideal trading cost of the shares. However, it can be used to analyze and predict future prices depending upon the fluctuations in past transactions.
Let’s understand the last traded price with the help of the below-mentioned example.
You are a milk retailer and have a local shop in your locality. You went to the milk vendor and asked him to tell you the milk price per liter. He, the shop owner, offered you the price for the milk at Rs50 per liter. Now here, the offered price from the milk vendor will be called “Ask Price,” but you want to pay only Rs40 per liter for the same quality milk, and it will be called “Bid Price.” You went to another milk vendor who also offers the same quality milk, and there you asked for the “Ask Price.” Here, he offered Rs45 per liter, and you also thought the offered price is fair for your requirements and entered into the deal. Here the Rs45 will be considered the Last traded Price for the same quality milk from the vendor. The same happens in the share market as well whenever someone buys the shares for the fixed price is called LTP for the next buyer of the same shares.
Importance of Trading Quantity in LTP
Before we discuss the importance of trading quantity in LTP, let’s know about trading quantity or volume. The number of shares that a trader wants to buy or sell at a predetermined price and time. Here, the high volume of high volume means many buyers and sellers of the same shares are trading with each other. For example, SBI has many buyers and sellers for their shares. In contrast, the Uttam Value Steels have a shallow trading volume. Trading volume is significant because the seller can sell their owned shares at the exact price if there is high volume. And it can be harder to enjoy the same if there is a low volume for the particular shares.
Why is LTP Important in The Share Market?
Knowing LTP is essential because whenever we search on new channels, Google Finance, and other financial news sites, they all show the LTP of the shares. Below are the two significant reasons that will help you understand why the Last Trading Price is important.
Understand Appropriate Bid Rate
In the share market, the share prices keep changing from time to time. Therefore, it can be hard to find the ideal price for a particular share. Using LTP, the trader or buyer for the particular share can understand the right price segment for that share. However, there are a lot more factors to consider before fixing up the expected or bid price. But still having an understanding of the Last Traded Price can be an excellent advantage for the stock trader.
Forecast The Stock Movement
As a share marketer or trader, you need to know the latest and futuristic prices of the share. And to analyze whether the trade deal will help you earn profit or not, it is essential to know the predicted price of the share. And this predicted price can be accurately analyzed if the trader knows the LTP. For example, if trader A has the share of ABC Ltd and wants to sell these shares at Rs100. But he examined that there is no seller for the same share, then he can increase the Ask price to Rs105. However, if he was selling the share for the asking price of Rs110 and other sellers were trading the same with Rs105, he can also reduce the share price to Rs105. It is how LTP or Last Traded Price help to analyze the price of the shares.
What is The Meaning of The Closing Price Of Shares?
The term closing price of the share or stock is the LTP of the particular day. Or the price of the day of the share at which it was last traded on the same day. For example, the share of Tata Motors was traded at Rs3000 at 3.30 PM, at which the stock market closed. The same LTP now will become the closing price of the share of Tata Motors.
Why LTP Or Last Traded Price is Different From Closing Price?
The LTP is the price when the market is open and free to perform trading activities. Whereas the closing price is the price at which the share traded last time in a day.
LTP or Last Traded Price is the price of the share at which it was traded last time in a day. It is used to determine and predict the pricing of the shares to deal with; however, it gives an overview, and traders should not wholly rely on it. So, in this article, we learned what the last traded price or LTP is and also understood many other aspects of it. I hope now you all have clarity about this crucial term of the share market. If you still need to ask something about this phrase, you can mention this in the comment.