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Average Trade Price Formula

8/7/22, 11:09 PM

The Average Trade Price (ATP) formula calculates the average price at which stocks were traded during a given period. It is used by traders to determine whether a particular stock is overpriced or undervalued.

Calculate Average Trade Price.

The ATP formula is based on the assumption that the market is efficient. This means that there is no advantage to buying or selling a stock before other investors do so. In reality, however, some people try to buy or sell shares before others because they think they will make more money than those who wait until everyone else has bought or sold.

The ATP formula is based on the premise that if a stock has been trading below its average daily volume for a sustained period of time, then the stock is likely to be undervalued. Conversely, if a stock has been consistently trading above its average daily volume, then the stock is most likely to be overvalued.

ATP is calculated using the following formula: