What is a Ticker Symbol?
A ticker symbol -- also known as a stock symbol -- is a string of letters used to identify a stock, bond, mutual fund, ETF or other security traded on an exchange.
How does a Ticker Symbol work?
When a company goes public or issues securities to the public, it selects an exchange on which those securities will trade and a ticker symbol that will identify those securities. In some cases, companies try to make their ticker symbols 'memorable' (such as TAP for beer company Molson Coors or DNA for biotechnology corporation Genentech).
The New York Stock Exchange (NYSE) uses ticker symbols with three letters or fewer (such as NYT for the New York Times Co. or T for AT&T). Ticker 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 special symbols that appear either as an additional letter in the symbol or, for NYSE stocks, after a dot to denote certain types of securities. Tickers ending in Q, for example, denote issuers that are in bankruptcy; Y denotes that the security is an ADR.
Why do Ticker Symbols matter?
Ticker 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. Ticker symbols, via their additional-letter codes, also communicate important information to investors about the trading status of the security or the issuer.