Editor’s Note: We’ll use fake to represent a wholly made-up company as an example stock quote throughout this post. does not claim to represent any real company (not now, not ever); we just thought it was smart.
You know those stock numbers that scroll at the bottom of some news programs? those are real-time stock tickers. They display up-to-date information about a security, such as a stock or ETF, by listing the last trade. Reading through them may seem a bit daunting, but breaking down each part can help.
first, some history
The stock ticker gets its name from the ticker tape machine, made in 1867. It was developed to display the movements, or “ticks,” of a stock’s price on the New York Stock Exchange. ticker tapes automatically recorded all trading activity on the floor on a narrow sheet of paper (the tape).
During those times, running numbers was literal; the messengers or “pad shovers” actually traveled a circuit between the trading floor and the brokerage houses to provide up-to-date stock prices. As you can imagine, the closer the office is to the trading floor on Wall St., the more accurate the quotes will be.
Faster ticker machines were introduced over the next hundred years, but they were still 15-20 minutes late. it was not until 1996 that a fully electronic real-time ticker machine was released. provided up-to-the-minute price and volume information, which is mostly what you see on TV, news, and apps today.
Although the physical ticker no longer exists, the name stuck.
so how do you read a stock ticker?
The key to reading stock tickers is to break down six parts.
The first part of a ticker is the symbol. is a combination of letters that represent security. the number of letters may vary depending on the exchange on which the security is traded. The New York Stock Exchange (NYSE) only allows up to 3 characters. There are some single-letter ticker symbols on the NYSE, and they’re coveted. For example, x represents American steel and f is Ford. nasdaq, on the other hand, allows four or five, five for foreign companies, which always have an f or a y as the final letter.
a couple of rules:
- ticker symbols have to be unique. when a company first goes public, they specify a first, second, and third option, just in case.
- the symbol has to be safe for work, so nothing profane.
Although not a rule, many companies will try to choose a stock symbol that relates to their business or brand in some way, such as the spotify ad and snapchat plugin.
share volume shows the number of shares that were traded in the last trade. can be numbered in hundreds (no suffix), thousands (k), or millions (m). so the example above means the last trade was for 2000 shares at a price of $102 per share, which we’ll talk about in a second.
This number represents the price at which the last share was bought or sold. You may also hear this referred to as “trade value” because it refers to the value of a stock at last trade.
That said, stock prices can change in a matter of milliseconds. So, for example, even if you see the price of the last trade as $55.55 in the ticker and want to buy it, it could be $56 when you go to start a trade, even a few moments later.
the direction of change is shown with an arrow. if the arrow points up, the stock is trading at a higher price than the previous day’s close. if it points down, it trades at a lower price.
This last part shows how much the price has changed from the previous day’s closing price. so if you look at the example image above with a change amount of $0.52 and a traded price amount of $102, it means that the fake was trading at $101.48 as of the previous day’s close.
color can be a quick and useful indicator when trying to understand stock price changes. so for those who can, here’s what to look for:
- red generally indicates that the security is trading at a price lower than the previous day.
- green generally means that it is trading at a price taller.
- blue and white can be used to show that the price is the same.
Probably the best way to put all this knowledge into practice is to practice reading the stock quote tape. keep this information handy the next time you see a ticker, and you’ll figure it out in no time.