Reading a stock quote

You open a stock's page in your app and a small crowd of numbers stares back. A large price at the top, two smaller prices beside it, a figure in green or red, a high and a low, and a line marked volume. To a beginner it reads as noise. Learn what each number is asking and answering, though, and the same cluster becomes a live status report on the stock.

The headline: last traded price

The big number at the top is the last traded price, or LTP. It is exactly what the name says: the price at which the most recent trade in that stock took place, the latest agreement from the order-book chapter. People call it the current price, but it is really the last price, and it updates with every new trade, ticking up and down through the day.

Next to it sits the change, usually in both rupees and percent and coloured green for up or red for down. This compares the current price with the previous day's closing price. A stock at 500.05, shown as up 4.05 or plus 0.82 percent, closed the day before at 496.

The two prices beside it: bid and ask

Two smaller prices sit near the LTP, and they are the ones that actually matter when you trade. The bid is the highest price a buyer is willing to pay right now. The ask, also called the offer, is the lowest price a seller will accept right now. As a rule you buy at the ask and sell at the bid.

The gap between them is the spread, first met in the order-book chapter. A narrow spread, a few paise, means many buyers and sellers clustered close together: a liquid, actively traded stock. A wide spread means few participants, and it is a quiet cost to you, because you buy a little high and sell a little low. When the spread is wide, a limit order protects you, as the order-types chapter warned.

The context: volume and the day's range

Volume is the number of shares traded so far in the period, usually the day. High volume means plenty of activity and interest, and it makes a price move more trustworthy: a jump on heavy volume reflects real demand, while a jump on a handful of shares means little. The day's range, the highest and lowest prices so far today, and often a fifty-two-week range for the past year, tell you where the current price sits relative to its recent travels.

What to carry forward

A stock quote packs several answers into a small space. The last traded price is the most recent agreement, the change measures today's move from the previous close, the bid and ask are the best available buy and sell prices, their gap is the spread and a real cost, and volume and the day's range give you context on activity and position. Together they tell you not just the price but how liquid and active the stock is, which decides whether you can actually trade near the number you see.

You can now read what a price is doing. The natural next question is why it moves at all, and that is the subject of the next chapter.