Ticker Symbol

Article byWallstreetmojo Team
Edited byAshish Kumar Srivastav
Reviewed byDheeraj Vaidya, CFA, FRM

What Is A Ticker Symbol?

Ticker Symbol is the use of letters to represent shares that are traded on the stock market, and it is mainly a combination of two or three alphabets that is unique and easy for investors to identify and buy/sell that particular stock with the help of this symbol on the stock exchange.

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A ‘tick’ is any change in the price irrespective of the direction. The stock ticker symbol automatically displays the required tick with other essential information such as volume and other information investors need on the current market conditions.

Ticker Symbol Explained

A ticker symbol aims to be as descriptive as possible despite being short in the US. The single-letter symbol is the most prized one. Let us understand how a ticker or stock symbol is determined:

Ticker Symbol

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How To Read?

The first digit indicates the general industry, and the random numbers in Japanese ticker numbers do not have specific descriptions making them harder to memorize.

One should also keep in mind the spelling of the tickers as there can be a thin line of demarcation between 2 stocks having close to identical tickets. E.g., in 2013, due to all the hype around the IPO of Twitter, many investors mistakenly invested in Twitter Home Entertainment, which turned out to be a bankrupt electronics firm. The ticker of Twitter was TWTR, whereas that of the latter was TWTR confusing. As mentioned in the initial part of the article, tickers ending with ‘Q’ indicate bankruptcy.

Suppose a ticker symbol is marked with the letters Eon NASDAQ or an LF on the NYSE. In that case, it is an indication that the associated company has fallen behind on its reporting obligation to the SEC (Securities Exchange Commission). These letters are added at the end of the normal symbol. The impacted companies are also set a grace periodGrace PeriodGrace periods are extra days given after the due date to undertake an unfulfilled obligation without penalties. They are a common instance in the financial world and are usually offered to clients who apply for a credit card, student loan, insurance, or mortgage to attract more customers.read more within which the reporting requirements should be satisfied. Once the requirement is met, these letters are subsequently removed. If the grace period has passed away and the requirements are not met, the security is threatened to getting removed from trading.

Examples

Let us consider the following company ticker symbol examples:

Example 1

Some of the examples are:

  • NYSE (New York Stock Exchange) uses the ticker symbol with three letters or a few – such as ‘NYT’ for the New York Times Co. or ‘T’ for AT&T.
  • Symbols with four or more letters generally denote securities traded on the American stock exchange and NASDAQ.
  • Those ending in ‘X’ indicate mutual funds.
  • Certain symbols denote specific status or type of security; say, tickers ending in ‘Q’ indicate issuers under bankruptcy. The letter ‘Y’ denotes security as an ADR.

Example 2

The below snapshot is a ticker symbol example of what a ticker looks like and the immediate indication it offers:

Ticker Symbol

The position of the stock ticker keeps on scrolling on the ticker screen throughout the day and where it stands then. As the stock market is very dynamicMarket Is Very DynamicMarket Dynamics is defined as the forces of market constituents responsible for the shift in the demand and supply curve and are therefore accountable for creating and reducing the demand and supply of a particular product.read more, the condition of the stock can keep on changing. It may be positive at one point in time and, after an hour, can fall into the red region. Additionally, if some news impacts an entire sector or the overall stock market, one can witness all the impacted stocks in the same direction.

Importance

Let us look at the importance of these symbols to understand the ticker symbol meaning more clearly. Some of the reasons indicating the criticality of tickers are:

  • It is the key to facilitating the vast volumes of trade occurring globally. The targeted parties can be easily identified.
  • The symbols with their additional-letter codes also communicate essential information to the investors about the trading status of a security to the issuer.
  • Their absence can confuse the issuers, securities, and securities from the same issuer.

A restricted number of stocks appear on the stock ticker during any period, primarily due to many stocks getting traded at a point in time. The stock ticker with the most significant change in price compared to the previous day’s trading session or those with the highest volume appears on the stock ticker.

This article has been a guide to what is Ticker Symbol. Here we explain it with examples, how to read, and the importance to understand its unique aspects. You may also learn more about corporate finance from the following recommended articles –

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