Whenever you have gone shopping, you are supposed to observe the price of products given along with MRP or maximum retail price. The same phenomenon is with stock, instead of MRP they are given with LTP, which stands for Last Trading Price.
LTP or Last Traded Price is the most recent price of a particular stock in which either It is sold or bought by a trader.
It is the most common term used to define the latest value of stocks in which it is sold or bought by any trader. In past times, the price of stocks remained changed every second, for a solution LTP was introduced to eliminate the complex understanding of the stock.
How is LTP calculated?
The MRP of a product is determined by the manufacturer or company that provides the goods, whereas the LTP is determined by both buyer and seller.
Let’s suppose a seller wanted to sell the stock and release a tender of the stock at the market price, buyers agreed to the price and bought the stock. The price of the deal is considered to be the LTP of that stock.
Importance Of LTP
In a diverse country like India, the stock market is complex, and the price value of stock keeps changing every second. Which makes it difficult to get a sense of stock movement.
For the solution, LTP is introduced to track and sense the movements of stocks. LTP in the stock market will provide a base price of the stock and eliminates confusion from the mind of buyers or traders. However, it will eliminate the risk of fraud.
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Advantages of LTP
There are several advantages of LTP, these are mentioned below:
- It is easy to track or sense the movement of a stock, any trader whether he is a beginner or advanced will easily track the previous record of stock.
- Eliminates the possibility of loss and false investments, as it provides a genuine fixed value that avoids fraud and erroneous investments.
- Providing a well-defined interface to traders and investors will enhance the quality of trading.
- More and more traders will engage in the most profitable stock. Due to such transparency, more and more traders will attract to the stock market.
Disadvantages of LTP
Along with advantages, it has some disadvantages also, these are as under:
- Some experienced and advanced traders might find it inaccurate due to their fewer profits before.
- The first trading of the stock will remain LTP for a full day.
- The market will remain the same throughout the day for a stock with LTP.
Frequently Asked Questions
What is LTP?
LTP is the term given to the most recent price of a particular stock.
What is the full form of LTP?
LTP stands for Last trading price.
Why was LTP introduced?
LTP is introduced in the Indian Stock market to provide a stable and transparent interface to the stock market.