What is a Ticker Symbol?

A ticker symbol refers to an organization of characters or letters that symbolize specific securities that are either registered in the stock market or public markets. An organization issuing securities in the public market, chooses an existing ticker symbol for securities. Individuals who are interested in trading or investing in securities utilize these symbols for placing orders. Each security that is listed on a stock exchange bears a distinct ticker symbol, and ensures smooth flow of trade orders in and out of the financial markets on a daily basis.

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How Does a Ticker Symbol Work?

Standard and Poors (S&P) devised the contemporary ticker symbols denoting letters alone in the United States. Earlier, one firm had the option to have different ticker symbols in varied stock markets. In general terms, ticker is the sound that the ticker tape equipments produce. Today, digital tickers have replaced these traditional machines. Different stock markets have different principles for issuing tickers. Important points:

• A ticker symbol involves a setting of characters, generally letters, displaying listed or publicly traded securities.
• An organization offering securities in the public market chooses a ticker symbol for representing its shares.
• For placing trade orders, investors and security trader utilize the ticker symbol.
• A security that is registered on a stock exchange has a specific ticker symbol. Hence, lots of trade orders take place in stock markets daily.

Ticker Symbol Basics

The most commonly known ticker symbols are equity or stock symbols. Stocks that are registered and traded on U.S. exchanges carry ticker symbols that can be of at most three letters. Stocks that are registered on NASDAQ carry ticker symbols of 4 letters. A stock having a ticker symbol becomes easy to be identified, researched, and traded in the market. Most of the times, the name of company is abbreviated as the ticker symbol. However, it is not mandatory. Sometimes, availability can create a hindrance for an organization in choosing a ticker symbol that resembles its name. Ticker symbols created for options display the underlying stock ticker. And, the type of contract (whether is a put or a call option), maturity of contract, and underlying asset affect ticker symbol for options. Ticker symbols for mutual funds come in alphanumeric format, and have the alphabet X in the end for their easy differentiation from stock symbols.

Ticker Symbols Followed by E or LF

A ticker symbol with the letter E or LF states that the firm that is related with the stock has failed to report to the Securities Exchange Commission (SEC). The related letters are added after the ticker symbol of the company. Usually, organizations receive a specific grace period for accomplishing their reporting-based obligations. When they meet the requirements, the additional letters are omitted. In case the company fails to meet the reporting obligations by the end of the grace period, it can result in delisting or removing the security from trading on the stock exchange.

The Stock Ticker

The stock ticker refers to the digital listing of the existing market prices of specific securities in real time. As lots of securities trade in markets on a daily basis, the stock ticker emphasizes on the ones trading in huge quantum on a specific day, and the ones with huge price fluctuations. The stock ticker offers existing know-how about the specific market operations. One can view the ticker symbol associated with the security, followed by the insights about the latest trade quantum and data on existing price.

Real World Example

For example, Ford Motor Company has F as its ticker symbol, and Facebook has FB as the ticker symbol. In case, it is difficult for you to find a ticker symbol of a specific company, then you may search the same on credible websites such as Morningstar, Investopedia, and Yahoo Finance. All you need to do is fill in the organizations name in the search section.