It’s a bit like the language of the stock market
If looking at the latest stock market overview made you wonder if traders are searching for the next scientific breakthrough, we might have to burst your bubble (pun intended). Ticker symbols are used on the stock market as abbreviations of the publicly traded shares within a stock market. This is probably why they are also called stock symbols.
What is a ticker symbol?
Just imagine a bunch of men cheering at a sports event and waving flags - that is how the stock exchange used to look like before ticker symbols came around. Consisting of letters, numbers, or both, a ticker symbol helps to identify a security within a stock market. These arrangements of 1-5 symbols were created for the stock ticker. This machine made it possible to transmit stock price information, printed on ticker tape, over telegraph lines. This technological leap made traders’ lives easier and sped up the stock exchange system. Today ticker symbols are conveniently displayed on digital screens. But ticker symbols aren’t fixed in stone. For example, in the case of merger or split between companies, tickers can change. Sometimes splits can lead to confusing situations because the two new companies end up with very similar ticker symbols .
5 is the magic number, kind of.
But ticker symbols can also have 4,3,2, or 1 letters and/or numbers. A bit like car plates, it doesn’t really matter how many symbols they have as long as they are recognizable. The shorter ones, however, do tend to belong to the older companies on the stock market. For example T stands for AT&T, while K for Kellogg (yes - you can invest in your favorite cereal!). These abbreviations were made as short as possible on purpose so that they would be easily identified by traders and ticker tape wouldn’t become a ticker roll…When extra letters are added to the ticker symbol, it means that the particular stock has additional features, such as a trading restriction. Companies can hold additional classes of shares such as preferred stocks (“PR” ). This special status will be reflected in the ticker symbol’s suffix. It’s also worth mentioning that some companies slightly alter their ticker depending on whether the shares of that company have voting rights.
Ticker symbols around the world
In Europe, ticker symbols tend to be 3 characters. In Asia, due to the variety of scripts, they are usually just numbers without letters. To be recognized, a ticker needs to state its exchange or country of listing. With more and more international trade this is becoming increasingly important. The exchange or location codes are paired with the tickers so that no one gets confused. And yes, mistakes happen, and that is why recognizing tickers is so important - especially when a company trading apples and another one trading oranges have very similar names. Tickers can also give away information on the current status of a company. One can recognize a special status on Nasdaq when a single letter is placed after a dot following the ticker symbol.
Why will your future self thank you?
You’ll be speaking “stock market” in no time by getting familiarized with ticker symbols, which will help you keep track of your stocks of interest. But word of advice: make sure to stay in the loop with these symbols, as they do change!
- Invented in 1863 by Edward Calahan, the stock ticker machine printed market prices on long pieces of paper in (almost) real time - revolutionizing the stock market, and speeding it up.
- The one-character symbol is highly sought after in the United States. As soon as one of these delists, another company takes ownership over it.
- Tickers don’t always have to be abbreviations. In some cases, such as in the case of Lacrosse Footwear, the ticker represents the industry. The ticker symbol? It's BOOT.