What is LTP in Share Market: Working, Calculation and Importance

LTP shows the exact price at which the most recent trade for a stock was carried out. It is the most important thing you should check before buying or selling the stock on any day. Now, what is LTP in stock market?

The LTP full form in the share market is the last traded price. It is the heartbeat of the market. 

Let us understand the LTP meaning in the share market in detail.

Understanding LTP in the Share Market?

Last traded price (LTP) refers to the most recent price at which a stock was bought or sold on the exchange. This figure keeps updating in real time throughout the trading session as buy and sell orders are matched and executed. 

For example, if the last trade in a stock was carried out at ₹400, then ₹400 becomes the LTP at that moment.

LTP Meaning for Traders

For traders, every tick on the screen matters. But the number they watch most closely is the Last Traded Price. It is the real pulse of the market.

Real-time indicator: LTP updates continuously during market hours whenever a buy and sell order is matched. It gives you the most current reflection of a stock’s price.

Market value: It provides a quick snapshot of a stock’s present market value by showing the exact price at which the last trade took place.

Trend analysis: Tracking a series of LTP movements through the day helps traders identify short-term trends and predict possible price shifts.

Supply and demand factor: LTP is shaped by liquidity, demand, and selling pressure. This makes it a direct reflection of how the market values a stock at any given moment.

LTP in Share Market Example

Let’s say there’s a company called “ABC Industries” whose stock is being traded in the market. At 10:00 AM, the first trade of the day for ABC Industries happens at Rs. 100 per share. 

So, Rs. 100 becomes the LTP at that moment.

Now, another trade for ABC Industries happens at 11:30 at Rs. 105 per share. 

So, the LTP now would be Rs. 105.

Using LTP in the share market, you can make the right decisions about buying or selling.

How is LTP Calculated?

In India, calculating LTP in the share market doesn’t involve any complex formula; it’s simply the price of the most recent trade.

It’s defined by the matching of a buyer’s bid price with a seller’s ask price. When both parties agree on a price and the trade occurs, that price becomes the LTP for that stock at that moment. 

• You can check the LTP in the share market at the NSE and BSE websites.
• Similarly, for options, you can check the LTP in the option chain.

Every time a trade occurs for a stock on an exchange, whether it’s the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE) in India, the price at which that trade happens becomes the LTP until the next trade occurs at a different price.

Trading Volume and LTP

Trading Volume is the total number of shares traded over a specific period. 

Do you know that high trading volumes often lead to a more stable LTP?

This is because more trades are happening, which can smooth out price changes. 

On the flip side, low trading volumes can make the LTP more volatile. This is because fewer trades can lead to bigger price swings.

How to Use LTP in Your Trading Strategy

If you combine LTP with traded volume, it can give you simple buy–sell signals. 

Here’s how you can make the right trading choices using LTP in share market-

LTP Movement	Volume Trend	What It Means
LTP moving up	Volume rising	Strong bullish signal.This means buyers are active, and demand is increasing
LTP moving up	Volume falling	Mild bullish.This means that the price is rising, but with weaker support, so caution is needed
LTP moving down	Volume rising	Mild bearish.This basically signals that sellers are active and pushing prices lower. You need to watch closely
LTP moving down	Volume falling	Clear bearish This shows a declining price with no strong buying interest

What is the Importance of LTP in Share Market?

In the stock market, a single number can shape perception, trigger trades, and capture sentiment, and that number is the Last Traded Price (LTP).

• Current Market information: LTP provides traders and investors with the most recent price at which a stock was traded. It gives you an up-to-the-minute view of its current market value.
  
• Helps in decision-making: It acts as your reference point for evaluating stock performance and placing trade orders. Based on this, you can make the right investment decisions.
  
• Shows Market sentiment: LTP often reflects the prevailing market mood. 

A rising LTP can suggest increasing demand and positive sentiment.

On the other hand, a falling LTP may indicate selling pressure or caution among investors.

• Trading strategies: Many traders rely on LTP while applying technical analysis, setting target and stop-loss levels, or executing intraday trades where every price movement counts.

Difference between Closing Price and Last Traded Price (LTP)

It’s easy to mix up closing price and LTP, but they’re actually quite different:

• Last Traded Price (LTP): This is simply the price of the most recent trade in a stock. It changes constantly during market hours as buy and sell orders are matched.
  
• Closing Price: Unlike LTP, the closing price is not just the final trade of the day. 

On Indian exchanges, it is calculated as the weighted average price of all trades executed in the last 30 minutes of the trading session. This makes it a more stable benchmark for evaluating end-of-day performance.

LTP vs. Intrinsic Value

Intrinsic Value is the true worth of a stock based on its fundamentals. This could be earnings, assets, and other financial metrics. It represents what the stock should be worth according to its financial health.

LTP, on the other hand, is the current market price. It can be affected by factors like investor sentiment and market conditions. The LTP might be higher or lower than the intrinsic value. 

Conclusion

Every stock tells its story through its LTP. Understanding the LTP meaning in the share market is essential. It gives you a clear entry point, reflects real-time sentiment, and helps you judge whether the market agrees with your view. It serves as a crucial decision-making tool for investors.

LTP Meaning in Share Market- FAQs

Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.