Average Trade Price
Average Trade Price (ATP) refers to the average price at which a security or Asset has been traded over a specific period. It is calculated by taking the total value of all trades executed and dividing it by the total number of Shares or contracts traded. ATP is often used by traders and investors to assess the market value and performance of a security.
Formula:
ATP = Total Trade Value / Total Shares Traded
Example:
Imagine a Stock that was traded in three transactions: 100 Shares at $10, 150 Shares at $12, and 50 Shares at $11.
- Total Trade Value = (100 x 10) + (150 x 12) + (50 x 11) = 1000 + 1800 + 550 = 3350
- Total Shares Traded = 100 + 150 + 50 = 300
- ATP = 3350 / 300 = $11.17
Case:
In a trading scenario, a trader uses the ATP to determine whether to buy or sell a Stock. If the current market price is significantly lower than the ATP, the trader may see it as an opportunity to buy, expecting the price to revert to the average.