DEFINITION of stock symbol
A stock symbol is a unique series of letters or numbers, used to identify a stock traded on a stock exchange. They are also sometimes referred to as stock tickers or ticker symbols.
WHAT IT IS IN ESSENCE
Every traded stock has its own stock symbol.
The allocation of stock symbols varies from country to country. Some giving up to four characters to identify a stock, and others specifying a set number of characters.
A full stock symbol contains both the stock’s symbol and details of the exchange or country.
Microsoft on the NASDAQ, for example, is NASDAQ: MSFT or MSFT: US, but BP on the London Stock Exchange is BP: LON or BP: UK.
The name stock ticker originates from the days when stock symbols were used for transmitting prices using ticker tape.
HOW TO USE
When a company goes public or issues securities to the public, it selects an exchange on which those securities will trade and a stock symbol that will identify those securities. In some cases, companies try to make their symbols memorable and noticeable.
Symbols with four or more letters generally denote securities traded on the American Stock Exchange and Nasdaq. Symbols ending in X denote mutual funds.
There are also a series of special symbols that appear either as an additional letter in the symbol or, after a dot to denote special types of securities.
Tickers ending in Q, for example, denote issuers who are in bankruptcy, Y denotes that the security is an ADR.
Stock symbols are key to facilitating the huge number of trades that occur every day around the world. Without them, brokers and investors would likely confuse issuers, securities and different securities from the same issuer.
They, via their additional-letter codes, also communicate important information to investors about the trading status of the security or the issuer.