When you start trading, you come across the concepts of price metrics. Average Traded Price (ATP) is also one such price metric. Knowing these concepts helps you in making informed decisions. Let’s learn about the average traded price to make your investment portfolio more strategic and strong!
What is the Average Traded Price (ATP)?
An ATP is the average price or rate at which a stock was traded in a specific duration, typically a single day. You can understand the market situation by calculating the Average Traded Price. It will help your asset valuation.
There is a special formula for the calculation of the average traded price. The process is mentioned below:
ATP = Total Traded Value / Total Quantity Traded
So, for example, if your stock has three trades during a day with the following details:
| Sr. No. | No. of Shares | Rate of Trade |
| 1. | 100 | ₹150 |
| 2. | 300 | ₹100 |
| 3. | 250 | ₹160 |
To calculate the Average Traded Price, you will need two things:
- Total Traded Value; and
- Total Traded Quantity.
Let’s calculate those first.
- Total Traded Value = a total of the no. of shares * rate of trade
Hence, TTV = (100*150) + (300*100) + (250*160)
TTV = ₹85000
- Total Traded Quantity = a total of the quantity.
Hence, TTQ = 100+250+300
TTQ = 650 shares
Now, it’s time to calculate the Average Traded Price.
ATP = TTV / TTQ
ATP = 85000 / 650
ATP = ₹130.76
Point to note: A subtle connection exists between Average Traded Prices and moving averages in the stock market. But both serve different purposes.
Importance of Average Traded Price
Knowing the average traded price allows investors to make informed decisions. If the ATP of the company is less, on average, for the long term, it might not be a great investment. Let’s see how ATP is important for investors.
- Assessment: With the ATP, it is easy for an investor to assess whether the current market price has increased or decreased. The average traded price can become a benchmark for your other decisions.
- Decision Making: You can make a smarter investment with a comparative analysis of the current rates and the average traded price.
- Market Analysis: The sentiment of the stock market keeps changing. A rise in the ATP indicates bull sentiment, whereas a decline indicates bear trends.
ATP vs. VWAP: Key Differences
Most people confuse the Average Traded Price with the Volume Weighted Average Price. However, they are different in calculation and application. What is the volume-weighted average price, and how is it different from the ATP?
Let’s understand it from this table:
| Parameter | ATP | VWAP |
| Calculation | It is focused on the average price of all trades, usually in a single day. | Both price and volume are considered when calculating the volume-weighted average price. |
| Application | Has a straightforward application. Makes it easy to assess the general price level of stocks. | Provides insight after considering the volumes. So, it is more useful for the institutional investors. |
Where to Check the Average Traded Price?
Today, many platforms give you access to the ATP data. These include:
- Online Trading Platforms: Brokerage platforms provide data for various stocks in real-time.
- Financial News Websites: Platforms like Dhan MadeForTrade comprise a community that regularly shares financial news, ATP, and other stock market metrics.
- Applications: Dhan mobile and computer applications for the stock market trade are also good sources to check the average traded prices.
What is the Use of Average Traded Price for Traders?
Traders can make the best use of knowing the Average Traded price by:
- Checking the Entry and Exit Points: When you have the ATP and current rate, you can assess the best points to enter and leave the trade.
- Assessment of Trade: Knowing the average trade value, you can keep track of the movement of the stock. This helps in risk mitigation and careful decision-making.
Developing Strategies for Trading
The Average Traded Point, along with additional information and stock market metrics, can help any trader develop a strategy for trading. If you are new to trading, read more about these 10 important trading terms that everyone should know.
To conclude, an Average Traded Price (ATP) is a basic price metric in the stock market. It offers investors and traders many insights into their stock holdings. With this, you can make informed decisions.
