While trading through a mobile application, you must have seen different types of prices, including opening, closing, high, low, etc. But there is another number you must have seen, which is called “ATP” or “Average Traded Price”. This price is very useful for a trade, and they often use it as a key indicator.
In today’s blog post, we will give you an overview of Average Traded Price, how it is calculated, and its importance through an example.
What is the Average Trading Price?
An Average Trading Price of ATP is the price of a share at which a particular stock was traded in a single day or a specific duration. It is generally the average price at which stocks have been bought and sold by the various investors during a day. It provides a sentiment related to the stock price movement. The ATP indicates the demand and supply of stock during the day.
How is Average Trading Price Calculated?
The formula to calculate the Average Trading Price is as follows:
Average Trading Price = Total Traded Value/Total Traded Volume
Whereas:
Total Traded Value: The total traded value includes the value of all individual trades.
Total Traded Volume: This includes the total number of shares which were bought and sold during the specified period.
Example of Average Trading Price
Let’s understand the average trading price through an example.
Suppose 1,00,000 shares of a company named XYZ were traded at different prices throughout the day on 5th May 2025, and the total traded value is 50,00,000. Let’s calculate the average trading price using the formula below.
Average Trading Price = Total Traded Value/Total Traded Volume
Here, the Total Traded Value is 50,00,000. And the total traded volume is 1,00,000 shares.
Hence, 50,00,000/1,00,000
= 50
Therefore, the average trading price of XYZ Company Limited on 5th May 2025 is 50 INR.
Read Also: Average Stock Price – Formula, Calculation, and Example
Importance of Average Trading Price
The key importance of the average trading price is as follows:
- Key Indicator: The average trading price is an important indicator as it shows the average market momentum. It is better than the last trading price.
- Helpful in Intraday Trading: Traders often use the average trading price to set support and resistance levels.
- Decision Making: If the stock price is trading above the average trading price, it helps a trader identify bullish momentum, and vice versa.
- Market Sentiments: The Average trading price market sentiment of buyers and sellers agreed during the day.
Difference Between Average Trading Price and Volume Weighted Average Price
The difference between the average trading price and volume-weighted average price is as follows:
| Particular | Average Trading Price | Volume-Weighted Average Price |
|---|---|---|
| Formula | Total Value of Share Traded/Total Volume of Shares Traded | Cumulative Price*Volume/Cumulative Volume of Every Trade |
| Time | It generally measures at the end of the day or the end of a specific session. | It measures intraday changes in real-time. |
| Usage | ATP makes it easy for a trader to access the general price level of stocks. | It is typically useful for institutional investors as it also considers the volume. |
Where to Check the Average Traded Price
One can check the average trading price at the following places:
- Trading Platforms: Almost all the brokers provide an average trading price on the trading platform provided by them. One can find ATP in the market depth section of the stock price.
- Exchange Website: One can visit the website of the National Stock Exchange or Bombay Stock Exchange, both exchanges publish the average traded price data on a real-time basis. The ATP are available on the stock detail page.
- Data Providers: There are various market data providers or financial websites which provide data on the average trading price along with the current market price.
- Trading Terminals: The terminals through which one can trade, provided by your stock brokers such as Odin, NEST, etc., also show average trading price data on the quote window.
Read Also: LTP in Stock Market: Meaning, Full Form, Strategy and Calculation
What is the Use of Average Traded Price for Traders?
The average traded price is a key indicator for traders to identify the price movement of a stock. It can be helpful for a trader in the following manner:
- Identifying Market Trend: Generally, when a stock price is traded above the average traded price, it generally indicates a bullish trend or suggests that buyers are taking a position, and vice versa.
- Entry Point: Intraday buyers take a buy position when the current market price sustains above the average trading price, as it provides them an opportunity to earn profit by going long in a trade.
- Support and Resistance: The Average Traded Price acts as a psychological support or resistance for the traders. Hence, a trader can act based on the average traded price.
Conclusion
On a concluding note, Average Traded Price is a key factor for a trader while initiating a trade. Unlike the last traded price, the average traded price gives you an overview of the price at which most of the trade takes place during a particular trading session. However, it is not advisable to use the average trading price as a key tool for initiating trade; it should be combined with other indicators such as VWAP, moving average, etc. Along with this, it is advisable to consult your investment advisor before initiating any trade.
Frequently Asked Questions (FAQs)
Is the Average Traded Price fixed for a particular day?
No, Average Trading Price changes throughout the day based on the executed trade quantity and volume.
Can a long-term investor use ATP as a key indicator?
Generally, Average Traded Price is used by intraday traders, and long-term investors execute their trades based on the fundamental analysis.
Is it good to buy stock below the average trading price?
No, it is generally not suggested to buy stocks below their average trading price, as it could be a sign of weakness or short build-ups in the stock.
Are the Average Traded Price and Last Traded Price are same?
No, the average traded price indicates the average price at which trades are executed on a particular trading session, whereas the last traded price shows the price at which the last trade was executed.
What is the use of Average Traded Price?
An average traded price is useful for a trader as it can help them identify the market sentiments, entry, exit points, and find the support and resistance of a stock.
