If you’re a beginning investor, market reports may seem like a confusing alphabet stew: ROI, NASDAQ, DJIA, ETF and CMOs all serve as shorthand to refer to big ideas that investors use. Once you study up and learn the basic acronyms, you can turn your attention to a whole other – and much larger – class of abbreviations: stock ticker symbols.
Stock Ticker Symbols
Each publically traded company receives a unique stock ticker symbol before its shares begin trading. A ticker symbol consists of one-to-five letters, depending upon where the stocks are traded. Stocks traded on the New York Stock Exchange or American Stock Exchange typically have between one and three letters, while those traded on NASDAQ may have one-to-five letters. Because ticker symbols are unique to their companies within the market, they serve to identify stocks with accuracy.
Why Ticker Symbols?
Ticker symbols provide a uniformity and brevity to companies that their official names usually don’t provide. For example, American Cyanamid, a lengthy corporate name, trades using the ticker symbols ACY and ACYA. This provides a measure of uniformity and saves space when stock prices are listed in a tabular format, on a bottom-of-screen crawler or an old-fashioned stock ticker that printed real-time quotes on paper ticker tape. While ticker symbols may make scanning prices difficult to beginning investors, they’re a handy shorthand for seasoned ones.
Extra Letters on Ticker Symbols
In addition to the three- or four-letter stock ticker code, an additional letter or group of letters may be attached to company’s ticker code like a suffix. These codes serve to identify that the price quoted isn’t the regular price for common stock, that the company is in bankruptcy proceedings or that it failed to file all the regulatory paperwork required. These ticker code suffixes vary among indexes, and investors must learn the codes for each market.
If you’re only investing in a handful of companies, you’ll probably end up memorizing their ticker symbols by default. If you’re a more active investor, however, you may deal with hundreds of stocks at once, making memorization difficult to keep track of. Several databases provide “translations” of stock ticker symbols, while Google offers basic information when you search with an operand of ticker: and the ticker symbol.
- Stock exchange image by mearicon from Fotolia.com