Get A Grasp On Stock Exchange Symbols

Stock Exchange Symbol Origins

Stock tickers and stock exchange symbols came about with the invention of the telegraph ticker machine. This machine was used to send trading information to the stock brokers. This machine dates back to the 1800's. Credit to this machine goes to Thomas Edison.

The "ticker" in stock stock ticker refers to the noise made by these ticker tape machines that were once used in the various exchanges.

Why Not The Whole Company Name?

Sure, sending the whole name of the company over the lines was considered. But at the time, they didn't have the high-speed bandwidth that we have readily today.

I think now, me downloading a movie takes 5 minutes. It would take them months or years. Of course , that's 30 years ago. Before 30 years, it would be virtually impossible.

It is still done this way today (with tickers not full company names) because it is a useful system and the investor gets they're information much more quickly.

Modern-Day Dynamic Stock Tickers

Dynamic stock tickers first made they're appearance in 1923. You see these on a streaming stock tickers. One segment consists of five parts, and is consider a ticker.

Every time a trade is made, there is a certain number of contracts being exchanged. In this example, four thousand contracts were exchanged.

The next number is 5.13. This refers to the price which the contracts were traded at. So, to get the price of this exchange, you would multiply four thousand by five point one three. You get a little over twenty thousand dollars.

The fourth part is the up or down symbol. This refers to whether the last trade took place at a price than is higher or lower than the previous day's end price.

Finally you see 0.05. I'm sure by now you can guess what this means. This is the difference between the price of the most recent trade compared to the last trade of the previous day.

These are the five parts of the current, modern-day, dynamic stock ticker.

How The Stock Exchange Symbols Are Chosen

The first stock exchange symbols that were given out were single or double letter symbols. These were given out on the first market to hit the US, the NYSC.

Originally, when the one or two letter stock exchange symbols were given out, the companies that were most actively traded got a one-letter symbol. This is still a valuable asset that companies sometimes buy and sell to each other.

This reminds me of the first days of the web, when the most valuable, usually one-word domains were purchased. They are now traded today for vast sums of money.

Different Ticker Length, Different Stock Exchange

You cant necessarily tell which exchange a stock is traded on today by the they're length. But, it wasn't too long ago that you could. I don't know if any of you payed attention to this before 1997. But that is the year that it all changed.

If you see a stock symbol with one or two letters, you would have known that it was traded on the prestigious NYSE, the first exchange in America.

Then came the AMEX, or the American Stock Exchange. Companies started getting three-letter stock exchange symbols which were placed on the classic NYSE or the new AMEX. So back then, if a company stock symbol was three letters you knew that it was traded on either the NYSE or the AMEX.

Last but not least, the NASDAQ, which is short for (something you probably haven't heard before) The National Association Of Securities Dealers Automated Quotations. That's a mouth full. Back in the day, any stock that had more than three symbols was traded on this exchange.

Its not that important to know which exchange a stock is trading on based on the length of they're ticker. Most stock brokers allow you to trade on all three. The information is also readily available if you desire. The SEC agrees and that is why they allowed companies to trade exchanges in 1997.

SEC Loosens Up

Yes, 1997. Not too long ago, In my lifetime and probably yours as well. This is of course unless if you are an aspiring young teen trying to broaden your horizons. More power to ya!

At first, the only acceptance to the above rule is that if you were a company on the NYSE and you had a three-letter ticker symbol, you could move to the NASDAQ and keep that symbol.

Shortly after, this rule expanded to companies with shorter symbols. Now, any stock can move to from the NYSE to the NASDAQ regardless of how long they're ticker symbol is.

The NASDAQ now hosts tickers that range from one to five letters.

The Reason For Longer Tickers

The reason for that fifth letter on some stocks is not because that was the original ticker assigned. It was originally a four-letter ticker it just gained an extra couple pounds.

Four-letter stock tickers sometimes get an extra letter on the end. This symbolizes something about the stock. If its just five letters, its on the NASDAQ. If its five letters with a dot before the last letter, it would be on the NYSE.

As I said before, the letter stands for something about the stock. A few examples are B for 'Class B', F for 'Foreign', E for 'Delinquent With The SEC' and X for 'Mutual Fund'.

Understanding The Basic Principle

The main lesson I hope you got from this is how to read a dynamic stock ticker. This will be useful in your daily trading. However, since I focus on technical analysis, this is not a main aspect of my strategy. And it will most likely will not be a main aspect of yours.

I hope you now have a firm grasp on how to read stock exchange symbols as well as a little interesting information about them.