What Is a Stock Ticker? Definition, How They Work, and Origins

Fact checked by Katrina MunichielloReviewed by Michael J Boyle

A stock ticker is a report of the price of certain securities, updated continuously throughout the trading session by the various stock market exchanges.

A “tick” is any change in the price of the security, whether that movement is up or down. A stock ticker automatically displays these ticks, along with other relevant information, like trading volume, that investors and traders use to stay informed about current market conditions and the interest in that particular security.

Key Takeaways

• A stock ticker reports transaction and price data for a security, updated continuously throughout the day.
• A stock ticker typically reports on the most active securities or ones making headlines on a given day.
• The ticker typically shows the ticker symbol, the price change and percentage change from the previous session’s close, and often the volume of the shares being traded.
• Some tickers color code information to reflect the direction of the price, with green for higher, red for lower, and a neutral color like gray or tan for no change.

Understanding Stock Tickers

A limited number of stocks appear on the stock ticker during any particular period, due to a large number of stocks trading at the same time. Often, the stocks with the greatest change in price from the previous day’s trading session, or those trading under the highest volume appear on the stock ticker.

You have probably seen a stock ticker scrolling by at the bottom of the financial news networks on television. The ticker provides current information for certain stocks, including the ticker symbol (the one-to-four-letter code that represents a particular stock), quantity traded (volume for each transaction), price, a green “up” arrow if the price is higher than the previous day’s closing value, a red “down” arrow if the price is lower, and the net price change (either as a dollar amount or percentage) from the previous day’s close.

Note

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If the price is unchanged, the arrow may be gray in color or simply absent. Often, the ticker symbol and the net price change also appear color-coded: green if the price is higher, or red if the price is lower.

You can watch stock tickers on a variety of financial news networks, and many trading platforms allow you to customize and view stock tickers that can be displayed at the bottom of your computer monitor.

Important

Many of today’s fully electronic stock tickers display market data in real-time or with a small delay.

Origins of the Stock Ticker

The first telegraphic ticker tape was created in 1867 by Edward Calahan, who was an employee of the American Telegraph Company. Just four years later, Thomas Edison improved upon Calahan’s invention and patented it.

Mechanical tickers were printed on paper by machines that made the flow of information more efficient. As the technology evolved, that dissemination became faster and almost real-time, as we can see today.

Ticker-tape machines introduced in 1930 and 1964 were twice as fast as their predecessors, but they still had about a 15- to 20-minute delay between the time of a transaction and the time it was recorded.

It wasn’t until 1996 that a real-time electronic ticker was launched. These up-to-the-minute transaction figures—namely price and volume—are seen today on TV news shows, financial wires, and websites.

What Is the Ticker of a Stock?

A ticker of a stock is its ticker symbol, which is a unique grouping of letters that identifies a specific company. For example, Apple has a ticker symbol of “AAPL,” Exxon has a ticker symbol of “XOM,” and Coca-Cola has a ticker symbol of “KO.”

How Does a Company Get Its Ticker Symbol?

When a company goes public on an exchange for the first time, it is assigned a ticker symbol. Usually, a company can pick its own ticker symbol. If it already exists, they must choose another one. If they don’t pick one, the exchange will assign them a symbol. The ticker symbol is usually representative of the company’s name, for example, AMZN for Amazon or MSFT for Microsoft.

Do Funds Have Ticker Symbols?

Yes, funds have ticker symbols that identify them in the same way stocks have ticker symbols. This is primarily the case for exchange-traded funds (ETFs) that trade on exchanges like stocks.

The Bottom Line

Today, paper ticker tape that was used in stock tickers is only used for symbolic purposes—for instance, to be thrown from building windows during a ticker-tape parade. Still, the stock ticker lives on in digital or electronic form, providing the public with up-to-date prices on the stock market.

Read the original article on Investopedia.