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What is the Current Market Price (CMP)?

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Knowing the technical and common terms of the stock market is crucial for every trader. Let’s start with the term current market price which means the price of any given security in the market. Understanding current market prices is essential to trade in the stock market, so let’s delve deep to find everything you need to know including current market price meaning, its importance and a comparison between CMP and LTP.

Understanding Current Market Price (CMP) in Detail

Let’s begin with what is current market price?

Current market price or CMP is used to represent the price at which a security is being traded in the stock market at the given time. The market price of any security fluctuates at all times making it important for traders to understand current market prices before deciding to put in their money. 

Importance of Current Market Price (CMP) in Financial Market

Trading in the stock market is based on the current market price of securities making it a highly valued term. Here’s how the current market price becomes important for a trader:

  • Investment Decision: Investors' decisions about investments are primarily based on the current market price of a security they are interested in.

  • Exit and Entry Point: The entry and exit points are crucial for investors to expand their profit margins, and investors decide their entry and exit points based on the current market price.

  • Gauging Securities: The current market price of a security helps in evaluating where the said security is overvalued or undervalued. 

 Additional Read: What is Trading Account: Definition, Types & Benefits

Types of Current Market Price (CMP)  

Now that you have a fundamental understanding of current market price meaning, let’s take a quick look at the types of current market prices: 

  • Intraday CMP: Traders interested in short-term or intraday trading rely on the price of a security in a single day called intraday CMP.

  • Historical Average CMP: Another type of current market price is the historical average, under which the average CMP of a security is calculated over a specific period. 

  • Sectorial CMP: As the name suggests, sectorial CMP talks about drawing a comparison of a security’s CMP with other securities in the same sector/industry to analyse the actual value. 

Additional Read: How To Enter And Exit in Intraday Trading 

Examples of Current Market Price  (CMP) 

Let’s take a simple example to further simplify, the current market price and its importance for you.

Say a stock of XYZ company valued at ₹100 at the beginning of the day and as the market progressed, the value of the stock rose to ₹140 the same day. However, the next day the stock price fell to ₹90. 

Now, here the current market price of a stock changed from ₹120 to ₹140 and a downward value at ₹90. These changes in the price impact the decisions of investors to purchase or sell the stock. 

Difference Between Current Market Price (CMP) And Last Traded Price (LTP)

Before you leave, let’s quickly understand how the current market price is different from the last traded price. Primarily, CMP and LTP differ in their relevance and usage. 

The current market price is the current value of a security or the price at which the security is being traded at a specific time frame. It is continuously being updated based on market trends, demand and supply. CMP is used by traders to decide on purchases and sales.

On the other hand, the last traded price or the LTP is the price at which a security was last traded i.e. the price of the security agreed between a buyer and seller. The price is updated and fixed based on the last transaction and it helps a trader analyse the security’s market value better. 

Conclusion

Understanding the current market price as a term and its importance in the stock market is crucial for every trader to ensure that they are making a smart choice. Several underlying factors impact the CMP of security that needs a detailed analysis of the market to understand. 

As a beginner, understanding these technical terms is the first step to kick-start your trading journey. Additionally, a trading account with a platform like Bajaj Broking that provides a seamless, quick and hassle-free experience is essential. 

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

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

For All Disclaimers Click Here: https://bit.ly/3Tcsfuc

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Frequently Asked Questions

What is the current market price of a stock?

Answer Field

The current market price of a stock represents the value or price of a stock at which it is being traded in the market.

How is the current market price different from the historical price?

Answer Field

The current market price represents the price of the stock at which it is being presently traded whereas the historical price is the average price of the stock over a given period.

Why does the current market price fluctuate?

Answer Field

The current market price fluctuates depending on several factors like market trends, demand, supply and the overall economic policies of the government. 

How can investors use the current market price in their investment strategies?

Answer Field

Investors can use the current market price in their investment strategy to find entry and exit points, make informed choices and evaluate whether the stock is overvalued or undervalued.

Where can I find the current market price of different financial instruments?

Answer Field

The current market price of different financial instruments can be found at the official website of the company or you can head to a reliable trading portal like Bajaj Broking to find timely updates on prices of securities you are interested in.

What are the methods to Determine Current Market Price (CMP)?

Answer Field

The Current Market Price is determined by several factors in the stock market like last traded price, demand and supply, trading volume or liquidity of stocks. Additionally, the overall market sentiment affects the current market price making it fluctuate even within a day.

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