What is CMP in the Stock Market?

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20 Jul, 2021

8 min read

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In previous times, the stock market was a physical space that traders set up offices and desks at, and stocks, shares and bonds were traded in physical share certificates on sheets of paper.

Introduction

This model, while still profitable for traders and investors at the time, had many drawbacks; from shares, certificates being forged, lost and displaced, to various discrepancies caused by ever-changing stock market prices and a paper trail that struggled to keep up. Now, however, being able to trade on the stock market is as simple as downloading an app and filling out a form. With the Demat account opening procedure being made completely digital and seamless, almost every individual can now access the stock market.

With this ease of access, however, comes a stiff learning curve as well. For those who are not well versed with technology and technical terminology, using these stock trading apps to trade might seem like a tremendous challenge for some. With a slew of information such as graphs, prices and trading quantities having to be fit into one screen of your phone, many terms have been abbreviated or turned into acronyms. As a result, one might at first find the interface challenging, but the easy way through is only a few minutes out.

In this article, let’s take a look at one such micronised term: CMP. Keep reading ahead to understand what is CMP in stock market and the CMP meaning in share market.

CMP

During the course of its existence, a stock’s price is almost always evolving, down to every second. Even as markets stay shut, public perceptions and developments have an effect on the price of a stock, which is reflected by the stock opening with a break/jump upwards, or downwards. CMP refers to the Current Market Price. If one were to aim to visualise this, the life of a stock can be charted on a graph. The CMP is the most recent point addition to this graph, where what the stock is priced at, at that moment in time. Therefore, CMP in the stock market represents the current market price of a stock. Let’s delve deeper to get a better understanding of how CMP works and CMP meaning in the share market.

Importance of CMP

The CMP in the share market of a stock is important to you as an investor or trader, as it can tell you what the price of a stock is at that particular moment. Coupled with computing the price of a stock a few moments before, alongside a fundamental and technical analysis, one can employ the CMP in the stock market of a stock to make an educated guess that the CMP will be 10 minutes, 10 days or 10 weeks in the future. Looking at it this way, the CMP of a stock is merely what the price is at any given moment. Once the moment is up and the next comes along, so does a new CMP. One may ask well, what happens to the CMP that just preceded the current one? In order to understand this, we will require an addition to the CMP in the stock market study, the LTP.

LTP

The LTP or Last Traded Price of a stock represents the price that the stock was most recently bought and sold for. Much like the CMP meaning in share market, the LTP is also ever-changing and does so with every trade that takes place. For instance, if you purchase a stock, for a split moment, the price you bought the stock at was the LTP of the stock. Due to the high quantities being traded, however, the LTP of stock changes with every fraction of a second that passes.

Now then, if the CMP in the share market is the current price that the stock is trading at, and the LTP stands for the last price that the stock traded at, then wouldn’t they both effectively represent the same thing? The answer is not entirely. Let's take a deeper look to understand why.

The difference between CMP and LTP

One might be quick to inquire about the difference between the CMP meaning in share market, and the LTP of a stock. However, despite the close proximity, they both exist in, there is a key difference between the two that prevails.

Let's say for instance, that you are considering the purchase of a certain stock. You visit your stockbroking app in order to look at what price the stock is trading at. If the price of the stock is at 100 for instance, and LTP for the stock you see is 99.8 rupees on your screen which is the price you can purchase the stock at, then that is your CMP in the stock market. For the seller, the price you are offering to purchase at is the CMP. Since neither one of you has executed the trade yet, the price is the CMP in the share market. If you then decide it might be a good idea to invest in that stock and make a purchase, then the price you purchased it at will be the LTP or last traded price. One can therefore claim that the actual CMP of stock varies minutely from an investor to investor, and the general CMP in the stock market is an average of these various CMPs that are present between fractions of a second.

Conclusion

CMP in the stock market can be a confusing term at first when you come across it alongside various other terms on your stock trading app. However, CMP meaning in share market is nothing but the current price of a stock. If you are new to stock trading and digital stock trading apps, the Angel Broking stock trading app is free to download, with a seamless Demat opening process that will have you up and ready to begin your stock trading journey within minutes. With a clean and simple interface, the app is easy to use for novices, yet at the same time is feature-packed for those experienced traders looking to carry out complex market manoeuvres. The Angel Broking App provides you with all the tools you need to begin investing. However, the key is to learn the ins and outs of the market and do your own research to pick stocks that could offer potential value. Once you have done this, the app will help you seamlessly purchase and hold said stocks. Download the Angel broking App to begin your investment journey today.

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