This blog post is all about explaining what is CMP in Share market, how you can find it, and some examples of its usage.
Knowing the short forms related to trading makes it simple. The term "CMP" is frequently mentioned by experts on TV or webinars.
Every newbie at some time wonders what CMP stands for in the Share Market or trading. With the greatest explanation, here is the answer to your question. So, let's start!
What is CMP in Share market?
CMP stands for Current Market Price. This is the current price of a security. For example, if you are asked to find the CMP of Reliance Industries Ltd., it means what is its current market value.
In simple words, CMP is the current price at which the share is being traded.
CMP can also be referred to as Current Bid Price or Ask Price of a security depending on the kind of buying and selling taking place.
For example, if you are about to make an offer for a stock at the current price, then we will refer to it as CMP (Current Market Price).
If you are selling a share and someone makes an offer for buying, then we will refer to this value as the Asking Price of CMP. So when somebody buys shares at the Current Market Price, it is known as Market Order.
If somebody is willing to buy a share for Rs 100 but now its trading at Rs 200, then he has to place a Limit order instead of the Market order.
Also read: What is DP charges? Meaning, Calculation with Examples
Thus selling your share in the market is known as Market Limit Order or Stop Loss Order (SLO). We will discuss these terms in the letter part of this article so keep reading.
Furthermore, keep in mind that stock market prices are always fluctuating and changing. As a result, stock market values cannot always be compared to the Current Market Price or CMP at some point in time.
How and Where to Find the Current Market Price value
It is very simple to find the CMP value of any stock, just go to any trading website. For example, I am using the free stock market quotes on moneycontrol.com.
Just search for your desired company's name or ticker symbol and check it in the Market Section Scroll down a bit to see Current Price & Volume, that is CMP value As you can see below, the CMP value of Reliance Industries Ltd. is Rs. 2661.05.
The price you see on the screen may differ somewhat from the actual market price since it will fluctuate after your order is placed and before it is executed. The price may also fluctuate if your purchase quantity is huge enough.
During uncertain market conditions, the price of a stock might fluctuate significantly. Because there is less volume and less traded shares, these changes may be more during a volatile market.
So during these days, When you trade stocks, your profits or losses can be higher or lower than your expectation.
Some other important terms related to CMP
Some other terms are related to CMP, such as Limit orders, Market orders, or Stop orders. Let's have a detailed explanation of these terms with examples.
What is a Limit order?
A Limit order is an order to buy or sell a stock at no more than a specific price.
For example, if you are willing to purchase Reliance Industries Ltd for Rs 2000 but currently its market value is Rs 2500, then you can place a Limit order at Rs. 2000, instead of placing an order at Market price.
A limit order will only get executed when the required conditions of your trade match with current trading conditions. So, whenever someone will offer the same quantity of shares at your desired price then your trade will get executed.
Also remember that you can place a Limit order and keep it active for that particular day only. During the closing hours of the market, your broker will cancel your all pending orders including your Limit orders.
If your Limit orders are not getting executed, you can either change your limit price or place the order again the next day.
What is a Market order?
Market orders are order to purchase or sell stock at the most current price available. This type of trade is generally executed immediately and there are no chances for it getting canceled.
So if you're looking for instant execution of your stock trade, then Market order is the best option for you.
Note: A market order may not guarantee exact fills since it might be filled at any price.
You can also place two types of Market orders, "Buy Market order" and "Sell market order". There is no difference between the two except for when you are buying and selling.
If you place a buy order for any particular shares at the Market price then it will be executed immediately similarly if you place a sell order at the Market price then your shares will also be sold at Market price immediately.
Also, remember that the market prices are changing every second, so your trade may not always execute at exactly what you expected.
You can always cancel or modify your orders before they are filled by matching with current trading conditions again.
What is a Stop loss order?
A Stop order or Stop-loss order is an order placed with a broker to sell or buy shares when the price of a security reaches a specified price.
You can place this type of order after you have purchased (or sold during Intraday) any stock so that it will automatically get executed when your desired Market Prices reach your Stop loss prices and also prevent further losses in case the market falls.
A stop-loss order (or "stop order") is used by investors as insurance for their investments, allowing them to limit their losses on stock trades.
For example, suppose you bought XYZ shares at Rs. 100 per share, and then you placed a Stop-loss order of Rs 95 on that stock so once the price falls to Rs 95, your trade will get executed automatically by selling those stocks with an average market price of approx.Rs 95 (assuming buyers are willing to purchase it at this point)
Note: A stop order will be executed at a specified price, once your desired Market Prices reach it (not always). Also, note that there are no guarantees for exact fills since they might get filled at any price.
So, whenever you place a Stop-loss order for your stocks then it will be executed at the best available Current Market Prices and you can't change or cancel them before they are filled by matching with desired trading conditions again.
But don't worry it is good to have some insurance before investing in any share because that's what stop loss is for.
If you are looking for a stock market term, chances are that it is explained here. And if not, please feel free to contact us and we will be more than happy to help.
We hope this blog post has been helpful in understanding some of the key terms related to CMP!
What is CMP in Stock Market?
CMP means Current Market Price. It is the current price in the market for a particular share. It is also known as Market Price or Current bid Price.
How to Find CMP?
To find the CMP value of any stock, you can visit the NSE or BSE websites or check your broker's trading platform.