Stock ticker symbols are one of the important concepts that investors need to know before entering the stock market. So, what are stock ticker symbols and how to read them? We will explore together in the following article!
What are stock ticker symbols?
Stock ticker symbols are a type of identification symbol used to identify publicly traded companies through a string of characters. Stock ticker symbols are often acronyms based on the company name to describe that company’s stock.
Different stock exchanges have their own conventions for allocating stock ticker symbols. For example, stocks listed on the New York Stock Exchange (NYSE) can have up to four letters with a few exceptions, while stocks listed on the NASDAQ can have up to five characters. Companies can choose their own stock ticker symbols, but the exchange reserves the right to reject a ticker symbol if it is offensive, duplicates another company’s stock ticker symbols, or is misleading.
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History of the stock ticker symbols
On a typical trading day in the 1800s, when stock exchanges first began operating, a company’s stock price was communicated by writing or shouting out the company’s name. This method quickly became cumbersome and time-consuming as the number of publicly traded companies skyrocketed.
In 1867, Edward Calahan invented the single-character ticker and installed it in stockbroker offices. The device used a telegraph network to convert signals into letters and numbers, which were then printed on ticker tape to transmit stock quotes to investors in near real time.
The company symbol was later shortened to one to five letters to speed up the transmission of information about stock price movements to investors. Although ticker machines became obsolete in the 1960s, stock ticker symbols continued to be used as a marketing tool by the New York Stock Exchange (NYSE). Today, stock ticker symbols are still used to save time and help quickly identify specific stock prices.
How does a stock ticker symbols work?
Because the volume of shares traded at any given time is so large, only a small fraction of them are displayed on the electronic stock ticker. Stocks with the largest price movements compared to the previous trading session or with the highest trading volume will usually be displayed prominently on this ticker.
You may have seen the stock price board that runs across the bottom of financial news channels. It displays real-time data for a number of stocks, including: the ticker symbol, trading volume, a green arrow pointing up if the price is higher than the previous day’s close, the current price, a red arrow pointing down if the price is lower, and the net price change (in dollars or percentages).
How to read stock ticker symbols
Stock ticker symbols contain a lot of useful information for traders. Let’s look at a real-life example of a ticker:
In this example, we are looking at the stock ticker of Apple. Based on the information provided, the trader can learn the following data about the stock:
- Ticker code: AAPL
- Trading volume (number of shares bought and sold): 38.91 million
- Current stock price: $160.77
- Price trend in trading day: up
- Price change in the day: +1.98%
Knowing how to read stock ticker symbols helps traders better understand the market and how it works. Stock ticker symbols provide real-time data on stock performance, helping investors make more informed trading decisions. They also allow for quick comparisons between different stocks.
By tracking tickers, traders can take advantage of market volatility, monitor portfolio performance, and identify potential buying and selling opportunities, especially when combined with fundamental and technical analysis.
Types of stock ticker symbols
Different asset classes will have different ticker symbols. For example, if a company has multiple classes of shares traded on the market, those shares will have a class symbol (suffix) added to their ticker.
Preferred stock
A company’s preferred stock may use the same ticker symbol as its common stock, often with the suffix “.P.” For example, Microsoft Corp.’s preferred stock trades under the ticker symbol MSFT.P.
Share voting class
Some tickers may indicate whether a stock gives shareholders voting rights. For example, Alphabet Inc. (formerly Google) has GOOG, which gives shareholders no voting rights, and GOOGL, which gives voting rights.
In some cases, different classes of stock will give different levels of voting power to their holders. For example, Berkshire Hathaway has Class A shares with the symbol BRK.A, which give it higher voting power than Class B shares – BRK.B.
Modifiers
Some ticker symbols have additional symbols to provide more detailed information. For example, on the NYSE, a letter followed by a period (.) indicates that the stock belongs to a specific class of stock. Meanwhile, on the NASDAQ, a fifth letter in the symbol usually indicates that the stock belongs to a specific category.
For example:
- The letter “Q” indicates that the company issuing the stock is in the process of bankruptcy.
- The “Y” indicates that it is a foreign company trading in the US market.
Where to find a stock ticker symbol?
A stock ticker symbol can be found all over the internet. When you search for a company, the ticker (or tickers if the company has more than one class of stock) will appear. You can also find stock ticker symbols on the company’s official website, on the exchange platform where the company is listed, or on financial sites like Investopedia if you’re not familiar with the specific exchange.
Some companies have stock ticker symbols that look very similar, and some issue different types of stocks. This means you need to be very careful to choose the right ticker symbol before making a trade.
Conclusion
Hopefully, the information shared in the article above will help investors better understand what stock ticker symbols as well as how to read stock ticker symbols. This will help investors quickly identify and understand the basic information of the issuer through the stock ticker symbols, thereby providing a basis for making decisions on which stocks to invest in to maximize their profits.
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