Business & Finance Finance

How to Read the Stock Market Ticker

Copyright (c) 2010 John Howell

If you're new to investing, one of the best things you can do for yourself is learn to read the stock market ticker.

If you're not familiar with it, it's the line of text and symbols that is often seen scrolling across the screen during nightly and national news reports. Ideally, it gives up-to-the minute stock information that investors, brokers, and businesses alike rely on for financial information.

To begin with, here's a little background on the stock market ticker itself. The "ticker" name dates back to the late 19th and early 20th centuries.

Back then, ticker machines reported on the stock market's daily actions by printing out long streams of paper. As the stock market ticker machines printed, they made a distinct ticking sound. When people reference "ticker tape parades" they're referring to celebrations in which old ticker papers or tapes were used as confetti. Technology has changed drastically, but the name still holds today.

The first thing you'll want to understand about the stock market ticker is the three letter symbol. In the New York Stock Exchange, each three-letter symbol represents a different company.

Companies may choose which three letters they wish to use but cannot use a combination of letters previously used by anyone else. For instance, Exxon goes by the symbol XON. For the NASDAQ, four-letter company symbols are used instead. So, Starbucks becomes SBUX.

The next part of the stock market ticker that's important to understand is the numbers that follow that three or four-letter symbol. These numbers represent the number of shares traded. For brevity's sake, a letter will follow this number to represent thousand, million, or billions of shares. So, K is thousand, M is million, and B is billion.

The second number that follows is the final bid price per share. You might see a number like 45.60%. This is the stock market ticker's abbreviation for $45.60 per share.

Finally, an arrow pointing either up or down will be the last stock market ticker symbol you see. This arrow indicates whether a stock is on the rise or fall. An arrow pointing up means the stock is on the rise while an arrow pointing down means it's on a downward trend. If you see a plus or minus symbol, it's the same idea. Plus means a stock is rising while minus means it's falling.

Some television networks will also use colors to indicate stock trending. In this case, red means a stock is falling while green means it's on the rise.

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