Investing in the stock market can be an exciting way to boost your income or provide for retirement. Stock traders rely on the stock market ticker to gain valuable information about their stock holdings in newspapers, on television and on the Internet. Knowing how to read a stock ticker is vital to becoming a successful trader.
Understand the stock market and the purpose of the ticker. When incorporated companies wish to raise a large pool of debt-free capital, they issue shares of company ownership, called stock, to the public or a select group of people. Publicly traded companies' stock can be bought and sold on stock market exchanges all over the world.
The stock market ticker is a continually-running account of each stock's vital information, which often changes throughout the day. Stock tickers generally include only stocks from a single exchange or country, and they can include information on bonds, mutual funds and commodities as well.
Analyze the ticker names of individual stocks. The one-to-four-letter abbreviations shown on the stock ticker represent individual public companies. Apple corporation, for example, is listed on the NASDAQ stock exchange as AAPL. Ford Motor Company, as another example, is listed on the New York Stock Exchange simply as “F.”
Analyze the first number after the name: the current stock price. Stock certificates are sold by companies to the public at specified prices. The market price — the price upon which buyers and sellers agree at any given time — can vary significantly from the stock's par value over time. Compare a stock's current price on the ticker to its previous price data to determine whether it is trending positively or negatively over time.
Understand the significance of the arrow after the stock price. The green up-arrow and the red down-arrow represent a rise or decline in price, respectively, over the day's opening price.
Look at the next number: the actual increase or decrease in the stock's price. Compare this number only against a stock's own price history to gain relevant insight. When comparing a stock against other stocks, use the next vital piece of information.
Analyze the final number: the percentage change. This number represents the size of a stock price's gain or loss compared to its total value. Percentage change data can help you to determine a stock's performance compared with others in the market.
Imagine a stock that trades at $100 per share, for example, and another that trades at $10 per share. If the $100 dollar stock goes up in value $30, and the $10 stock goes up $5, comparing the actual increases would indicate that the first stock has performed better. Looking at percentages, however, we see that the first stock has only gained 30 percent, while the second has gone up 50 percent.
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