LTP Full Form in Share Market

LTP's full form in the share market is Last Traded Price, which could be very confusing in day-to-day trading, but it is also one of the most important aspects for traders. The LTP or Last Traded Price, to put it simply, is the price of the last transaction on which it was executed in the market. It basically signifies in which price a sell or a buy order of stocks or options was sold or bought by the market participants.

LTP is extremely crucial because it helps the traders or market participants to predict, calculate and trade a market asset. The LTP also denotes the movement of stocks, securities, or options.

But just like anything in the stock market, LTP meaning can be very confusing; therefore, feel free to go through this article and hope you will find all your answers.

LTP Meaning in Share Market?

If you have a Demat account or check stock prices on Google, you will see there is always one number written in smaller font and size LTP. At such times you may have wondered what is LTP? In technicality, LTP stands for Last Traded Price, as discussed earlier also in this article. The LTP signifies at which price a particular asset (like stocks, options, futures, or even commodities) was bought and sold.

How is LTP Calculated?

In the stock market, suppose on a certain day, there are only two traders available who want to trade in a stock exchange. Trader A wants to purchase the equity of the State Bank of India (SBIN) and wants to pay INR 499 per equity.

Now another trader wants to sell the same number of equity shares of SBIN at INR 499. Therefore, the stock exchange simply works as a mediator and medium for transferring the SBIN stocks. The exchange also marks the amount of INR 499 as the Last Traded Price for that particular asset, here SBIN.

Therefore, LTP is basically the MRP or Maximum Retail Price of an asset for a particular time frame, on which a seller is selling his/her assets, and simultaneously a buyer is buying that asset at the asked price.

Usually, in a stock market, on average, thousands or even millions of people trade at once; this is why the LTP changes rapidly and never stays constant. But, when LTP stays static, that infers that the price of that stock is in the upper circuit or lower circuit.

Trading Volume and LTP

Although LTP does not generally get too much attached to company performance, assets, intrinsic values, dividends, bonus issues, share splits, or any announcements made by the company, the Last Trading Price values are generally determined by the trading volume.

The Trading Volume denotes that, at a certain time frame, how many buyers or sellers are involved in trading of a particular asset and how much they are quoting to buy or sell the asset. Suppose there are too many buyers and fewer sellers. In that case, the LTP generally goes up, which means the asset’s price for that particular time is increased.

On the other hand, if there are too many sellers and much fewer buyers, the LTP drops, which means the price of that particular asset during that time frame decreases. But sometimes, when the number of buyers or sellers becomes equal or nearly equal, the LTP can become static, or the price movements become less frequent.

When and Why LTP stays Static

On rare occasions, the LTP can remain static while the market is open. That happens only when the price of a particular asset hits Upper Circuit or Lower Circuit.

During Upper Circuit, the buyers place purchase quotes even at the maximum value allowed for a particular asset for that day, and there are no sellers. That means many buyers want to purchase an asset, and there is no seller, then the LTP remains static at the highest bid price or quote price.

During Lower Circuit, the seller's place quotes at the minimum value allowed for a particular asset for that day, and there are no buyers. That means a lot of sellers want to sell an asset and none in the market is interested in purchasing it, then the LTP remains static at the lowest bid price or quote price.

Every day, when the market closes, the LTP gets frozen for the day at the price at which the very last trade of the day for that particular asset was executed. But that is not the closing price.

Significance of What is LTP in Share Market

LTP or Last Traded Price is one of the most significant measuring tools of every asset registered in the market as well as for the market itself. In general, the market movement or movement of stock generally denotes how fast its LTP is changing.

The trading volume denotes the volatility of the market and market depth. The higher number of traders involved in a market and for a particular asset, the volatility of that market and asset increases. That means the asset price can quickly go up or fall sharply. Here, LTP helps traders predict or speculate the prices of their selected or targeted assets for a specific time window.

A stock price can go up or down, and LTP is the first marker to identify whether the price would go up or down. This way, the traders put advance quotes for buying or selling the assets on the market. In one word, without the current LTP is known, trading in the stock market would be impossible.

For example, you have SBIN shares, which you had bought at INR 495, and now the LTP is showing and the price is changing like INR 500, INR 500.10, INR 500.50, INR 500.65, INR 501.25, INR 501.55, and so on. This way, you can speculate that the price of your asset is going up, and if you quote your shares for selling at INR 503.00, they will get sold in the next few minutes and book profit. This situation denotes positive movement.

Similarly, suppose the change of LTP is rapid, and it is in the decreasing order. In that case, that signifies a negative movement, which means your chances of loss-making is high.

Different LTPs in Different Markets

An asset can be traded at different prices in different markets or stock exchanges. For example, the LTP for State Bank of India shares at NSE can be INR 499, while the same asset can be bought or sold at BSE at INR 495 and vice-versa. This offers a great opportunity called Hedging. That means, if your stockbroker allows, you can buy an asset at a lower price at the BSE and sell it at a higher price on the NSE without risking too much of your capital.

Closing Price and Notes

Every day, when the market closes, the LTP gets changed after some time for most assets. Then it is called the Closing Price, not the Last Traded Price. The Closing Price is generally defined as the mean or weighted average LTP for the last 30 minutes for an asset of trading.

Usually, the closing price becomes the opening price for the asset on the next trading day.

Many tools are now available such as Moving Average Calculator, MACD, VWAP, etc. These tools help to calculate, predict and speculate the LTP of an asset for a specific time in the future. This way, LTP can make trade executions easier and smoother for the traders.

Most of the stockbrokers provide the LTP view in two forms, the percentage (%) form and the numerical form, and you can change the view as per your convenience to get an edge over the other traders on the market.