Cmp in Share Market
You must have heard about stocks and share markets and how people perform trading. The stock market is a very vast and complex world, and it takes a lot of time for someone to understand everything associated with it. An individual must learn many different words, terms, and phrases to make sound and logical stock trading decisions. Of these, one of the essential terms is CMP or the current market price.
Your stock market journey will be easy and smooth if you know the little abbreviations traders use daily. Not only will you save time by understanding the entire concept, but you will also gain confidence when talking about your stocks with different people. If you are a beginner in the stock market world, this article is for you. Here, you will understand the CMP meaning in the stock market and some other terms that go hand in hand with it. Through this article, you will also learn how CMP can be an essential element in making decisions based on various stocks and shares. Read along to know everything.
What is CMP in the Share Market?
CMP in the stock market refers to the current market price. It is the current price at which the stock is being traded in the market. The price can be used to buy or sell that share at that particular time. The price value of the stocks is never the same and changes with time. What the value of the stock is right now, it will not be the same even an hour later. That is why CMP is always taken into consideration. The CMP is, thereby, the most critical element that the investors use.
Furthermore, the CMP is also determined based on different factors. These could be demand and supply, the company's performance, the economy's condition, market sentiment, etc. Since all the elements are prone to change and will not be stable, the stock's current market price will also change with time.
Importance of CMP (Current Market Price)
Now that you have understood what is cmp in the stock market, you should check the reason why it is vital to consider CMP. It is the element that will tell you, as an investor, the stock's price at the moment. Through CMP, you can also figure out how the stock will perform in the future after doing some technical and fundamental analysis and considering the past few CMP prices.
CMP is not the same; what you guessed a minute back might even change the next moment. That is why keeping track of previous CMPs is essential when figuring out the future CMP. Also, to understand CMP in the stock market better, you should also know about LTP which is often confused with CMP, which will be discussed later.
Some Other Terms Related to CMP
Just understanding what is CMP in the stock market will not help you become a stock market expert. For complete knowledge, you should also look at other constantly used terms along with CMP. These terms also determine how the actual calculations are done. Let’s look at them in detail.
What is a Limit Order?
A limit order is called a limit order when a trader places an order to purchase or sell a stock at that specific price. The critical thing to know is how it can be executed. A buy or purchase limit order will only be completed at the limit price or below that price. At the same time, a sale limit order will be completed either at the limit or more than the limit rate. In this manner, the traders can control the prices of their orders better.
Also, remember that a limit order only applies for that particular trading day. The broker will cancel all the pending orders as soon as the trading day ends. Like the CMP changes, if your limit order is canceled at the end of the trading day, you can change the pricing or even place your limit order again the next trading day.
What is a Market Order?
When a trader decides to sell or purchase a stock at the current market price, it is known as the market order. Such trades are not subject to a long wait and are often completed on an immediate basis. Therefore, the chances of orders being canceled are also less. Like a limit order, market order is also of two types - buy and sell.
The important thing, however, to remember is the price of the market order when the order is placed. Since the market price changes very frequently, there can be a situation that the market price of the share can be different from when the order was placed to when the order will be executed. The difference will be high if the number of shares bought or sold is higher.
What is a Stop Loss Order?
A trader generally places a stop loss order to prevent any losses that may happen in the case of a sudden downturn in the stock price. After the trader purchases or sells the share, the stop loss order can be placed with the broker. As soon as the trader puts a stop loss, the trader safeguards himself from any loss due to a sudden market change.
You should also know that a sell-stop order is always placed at a price less than the CMP, and a buy-stop order is placed at a price more than the CMP.
The Difference between CMP and LTP
CMP in the share market is the current market price, whereas LTP is the last traded price. These two can look very similar in some rare cases but are very different terms. As you know by now, CMP is the share's price at that particular moment. On the other hand, LTP is the last price at which the trader sold or purchased that specific stock.
LTP and CMP will not always remain the same, and there can be a small moment when they are the same as the CMP constantly changes. The LTP of the share can affect the CMP when the trading volume is very high, as it is the actual price at which the stock was last traded.
The stock market is an extensive term, and it can be really overwhelming for people who are new to it. Therefore, understanding the basic abbreviations becomes a must. The CMP in the stock market signifies the stock price at the current moment. It is the perfect way to understand the stock's performance by analyzing and keeping track of the last CMP numbers.
Moreover, CMP and other terms are used frequently; hence, complete knowledge is necessary to make sound trading decisions.
FAQs on CMP
1. How to find CMP?
You can easily find the current market price of the CMP of the stock on websites such as BSE, NSE, and even on the Economic Times or moneycontrol. There are different online trading platforms as well, from where you can get the CMP information of any stock.
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