What is LTP in the Share Market?

The prices of shares in the stock market are constantly fluctuating. Depending on the demand and supply levels, new trades in the market may occur at different prices than older trades. This is particularly true for stocks with high liquidity. The constantly changing prices give rise to the concept of LTP in the share market.

Not sure about the meaning of LTP in the share market and why it is important? This article can offer you some valuable insights about the concept of LTP. 

What is LTP in the Share Market?

LTP is an acronym for the Last Traded Price. As is evident from the name, this is the price at which the last or the most recent trade was executed in the market. The LTP in the share market generally keeps changing because stock prices are never fixed. They vary based on different forces and external influences. 

Primarily, the demand for and the supply of a stock determines the price at which it is traded. The demand and supply, in turn, are affected by the general investor sentiment, the company’s financial strength, company-specific news, sectoral performance, government regulations and broad market outlook. 

With so many factors affecting stock prices, it is no wonder that the LTP in the share market is not fixed. The variability in the LTP leads to volatility in the market, which is a crucial aspect to consider before you trade or invest in a stock. 

The Significance of LTP in Stocks

The LTP in the share market is important for various reasons. Knowing and tracking the last traded price matters because:

• It Helps Anticipate Stock Price Changes

The LTP is a crucial indicator for predicting short-term price movements in the stock market. By closely monitoring the LTP of stocks along with the trading volume and price trends, you can gauge the market sentiment towards a particular stock. A sudden spike or drop in the LTP may signal impending price changes. You can then make timely decisions to buy or sell the stock and capitalise on the market opportunity accordingly. 

• It Allows You to Decide the Entry or Exit Price

Knowing the LTP in the stock market can also help you make informed decisions about when to enter or exit a position. For instance, if the LTP is near a historical low, it might be a good entry point for buyers. Conversely, if the LTP is high, you can consider selling at this point to lock in your profits. Thus, the LTP acts as a benchmark that helps you strategically plan your trades to optimise the returns. 

• It Makes Investment Tracking Easier

Tracking the LTP of stocks simplifies the process of monitoring your investments. It gives you real-time insights into the current market value of a stock, so you can track the performance of your holdings more transparently. By regularly checking the LTP in the share market, you can also remain updated about market trends, compare the LTP with your purchase price and decide if your holdings are appreciating or depreciating. 

How to Find the LTP in the Stock Market

In theory, LTP in the share market is calculated using the bid and ask prices. The bid price is the highest price that a buyer in the market is willing to pay for a stock, while the ask price is the lowest price at which a seller is willing to sell a stock. When the bid price matches the ask price, a sale is executed. The price at which this sale occurs is the LTP of the stock.

However, in live markets with high levels of liquidity, the bid and ask prices fluctuate extremely rapidly. So, the mechanism for determining the LTP gets more complicated. 

As for how you can find the LTP in the share market before you make a trade, you have many avenues to choose from, as outlined below:

• Stock Market Apps

Many stock trading apps display the LTP for stocks. You can find this information on your watchlist or portfolio. You can search for any stock and the app will show you its last traded price along with other details like the bid-ask price, volume and more. 

• Stock Market Websites

Websites like NSE India, BSE India and other news portals also offer real-time data about stock prices, including the LTP. Simply enter the stock symbol in the search bar and you’ll see the LTP of the stock on the page. 

• Trading Terminals

Stock brokers offer trading terminals that make it easier to trade from your personal computer. In these terminals, the LTP is often prominently displayed and updated regularly. You can find this information on your dashboard or the pages dedicated to each stock.

• News Channels and Tickers

Financial news channels in India also regularly update the LTP of stocks listed on the main exchanges. You can also find this crucial information on stock tickers online, which display up-to-date information about different stocks. 

The Correlation Between Trading Volume and LTP

The significance of LTP in the stock market cannot be understated. However, it is not the only metric that you need to focus on. When combined with insights about a stock’s trading volume, the LTP can be much more useful for traders. 

The trading volume is the number of shares traded within a specific period. It often impacts the LTP directly. High trading volumes usually indicate strong market interest, which can cause rapid changes in LTP as buyers and sellers adjust their positions. Conversely, low trading volumes can lead to more volatile LTPs because fewer transactions can shift the price significantly. 

Also, any sudden spikes in the trading volume may suggest a potential trend reversal or breakout. This makes the LTP a crucial indicator when you are monitoring market activity.

LTP vs Closing Price

The LTP in the share market is often confused with the closing price. However, the two are slightly different. The last trade price, as you know, is the price of the most recent successful trade. However, the closing price is the price at which the price of a stock closes at the end of the trading day. It is calculated using the LTPs and the volume-weighted average price (VWAP) from the last 30 minutes of the trading session. 

How the LTP Can Help You Trade Better

You can use the LTP data along with trading volume to decide how the market is trending and structure your trades accordingly. The following pointers can help you with this.

• If the LTP and the trading volume are both trending upward, the market signal is bullish. 
• If the LTP is trending downward but the trading volume is increasing, the market signal is bearish. 
• If the LTP is trending upward but the trading volume is decreasing, the market signal is mildly bullish. 
• If the LTP and the trading volume are both decreasing, the market signal is mildly bearish. 

Also Read: Taking Stock: Q1 FY25 Equity Market Outlook

Conclusion

The LTP in the share market is a powerful tool that offers valuable insights for traders and investors alike. By understanding the LTP and combining it with other indicators like trading volume, you can make more informed decisions. The dynamic nature of the market means that LTP isn't static, and your strategy should not be either. 

This is where Motilal Oswal’s Research 360 comes into play. With its advanced analytics and real-time data aggregation, Research 360 doesn’t just show you the LTP and trading volume; it contextualises them with historical data, news sentiment analysis and sectoral performance. The platform's ability to provide deep market insights and custom alerts ensures you’re not just reacting to market changes but anticipating them. This strategic advantage allows you to stay ahead, make more informed decisions and optimise your investment strategies in a constantly evolving market.