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LTP in the Share Market

24 Feb 2022 0 COMMENT

In commodity-based consumer markets, prices are generally measured by the highest price possible i.e., the market retail price. Stock market prices work differently. Here, traders conduct transactions based on their anticipation of future prices rather than current prices for the most part. The pricing of stock market trade evolved alongside the trade itself. Early speculators would charge rates based on a product's price record in the past as well as its estimated price in the future. This tradition evolved further as new technology was incorporated into the area of financial trade. Starting with floor traders in the 1800s, stock market prices began to be measured in days and not weeks. With the introduction of telegraph tubes in the 1930s, this increased to hourly measurements, only superseded with the digitisation of stock market trade starting in the late 1990s.

Understand LTP meaning in Share Market

Before we determine the function of LTP (Last Traded price), we must understand the meaning of LTP in the share market. LTP in the share market refers to the last price at which a stock was traded in the market or exchange. LTP in shares has the following features:

  • An LTP is an historical number which refers to the last traded price of a stock.
  • LTP of any particular stock is dependent upon the market sentiment on that stock.
  • LTP as a market value is dependent upon its variations.
  • LTP as an indicator is volume sensitive. The larger the amount of trade a particular stock witnesses, the closer the actual price is to the LTP.
  • LTP acts as a constant price index, changing with every minute price fluctuations of a stock.
  • LTP is only an estimate, not a fool-proof measure of price.

Functions of LTP (Last Traded Price)

Now that we know what LTP means, we can discuss its functions. Functions of LTP in the share market are as follows:

  • LTP serves as the base price of any stock, the minimum price over which traders place their ask and/or bid prices.
  • LTP is charted to develop market depth information, showing the price value history of particular stocks, which can be used by traders to establish or break price trends of said stocks.
  • LTP is used by investors to decide whether specific stocks are worth investing or not.
  • LTP is used by investors to gauge the fluctuations in the stock market and its prices.

Difference between LTP and Closing Price

LTP can often be confused with closing price, as the LTP of a stock at the end of market time is also its closing price. However, there is a key difference between LTP and closing price of a stock.
The closing price of a stock does not account for the stock transactions after the market is closed, whereas LTP is calculated by taking into consideration the last transaction irrespective of market time.

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Conclusion

LTP is one of the essential indicators for a stock market trader or investor. Combining LTP with other indicators allows investors to make accurate estimates of the stock market fluctuations and make transactions accordingly. This makes it important for investors to have accurate knowledge of the nature and function of LTP.

Disclaimer

ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.