What is CMP in Stock Market

If you are a stock market trader or investor, you need to know the basics of the market. One of the basic terms to know is Current Market Price or CMP. In this article, we will learn everything about CMP.

What is CMP in the stock market?

The stock price is always changing. It goes up and down every passing time frame. The current market price at a particular time is known as CMP in the stock market. It is the price at which the stock is traded at a particular time.

Investors use this value to sell or purchase shares in the share market. Let us understand it with an example. If the stock price of company ABC is Rs 100 on a stock exchange, its CMP is Rs 100, and it is available to trade at this price. The next trade could be at Rs 101 or Rs 99 (also somewhere in between), depending on seller and buyer interest.

Importance of CMP

Now that you know about CMP, you must know its importance. The CMP tells you the current stock price. Once you do your technical and fundamental analysis and look at historical CMP, it gives you an idea of what CMP you can buy a stock and also where the CMP can go in the future. Here are some more points showcasing CMP's importance in the stock market:

• Buying and Selling: You use CMP to decide when or at what price to buy or sell a stock.
• Valuation: You can compare CMP with the intrinsic value of the company. It helps you determine if a stock is undervalued or overvalued.
• Market Trends: You can track CMP over time and identify market trends and patterns.

How to Use CMP in Trading?

CMP is essential value to know and track. Value investors can compare a stock's CMP to its intrinsic value (calculated based on fundamentals) and decide at what price they should invest in the company. Similarly, traders can also use CMP. Here is how they can use it:

Market Order: Fast and Furious

A market order is like jumping into a taxi without knowing the exact fare - you don't know whether you will have to pay less or more when you reach your destination (exit the trade). You buy or sell a stock at the current market price instantly. It is great for quick trades but can be risky due to price fluctuations.

Stop-Loss Order: Your Safety Net

A stop-loss order is like setting an alarm for your investment. If the current market price drops below a certain point (your stop-loss price), it automatically triggers a market order to sell. It helps protect against significant losses.

Limit Order: Taking Control

With a limit order, you set the price you are willing to buy or sell a stock. Your order is only executed if the market reaches your desired price. It gives you more control but might not execute immediately. For example, the current CMP is Rs 100, but you want to buy a stock at Rs 95. You can place a limit order at Rs 95 - you get the stocks only if the CMP reaches this mark.

How to Find CMP in the Stock Market?

Finding the CMP of a stock is simple. You can visit the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE) official website and check the latest CMP on the official website.

Also, you can check the CMP of all stocks on your broker's website. For example, if you want to know the CMP of the Reliance industry, you can visit ICICI Direct and look for the company, and you will find the CMP on both BSE and NSE. Please note that the CMP on BSE and NSE can vary slightly.

Before you go

We hope you now clearly understand the CMP is the price at which the transactions occur on the stock exchanges. It is one of the simplest and most fundamental concepts every investor must know about to understand how the market works at a high level. Also, since the CMP changes every single time frame. Hence, it is of great significance for investors.