Ticker Tape: What It Is, How It Works, and How To Read It

What Is Ticker Tape?

Ticker tape refers to the ribbon of paper or electronic representation of price quotes that appear in a linear fashion, providing market information to investors.

Ticker tape first appeared as part of 19th-century ticker devices that printed stock symbols and numeric data to convey information about trades and prices via information transmitted over telegraph wire. The ticker tape is electronic today but retains its name from the mechanical ticking sound the original analog machines made and from the long, narrow pieces of paper that stock quotes were printed on.

Understanding Ticker Tape

Each entry on the ticker tape displays the stock symbol (indicating which company’s stock has been traded), volume (number of shares traded), the price per share at which the trade was executed, an up or down triangle showing whether that price is above or below the previous trading day’s closing price and another number telling how much higher or lower that trade’s price was than the last closing price.

Electronic ticker tapes also use green to indicate a higher trading price and red to indicate a lower price, and blue or white to indicate no change. Before 2001, trading prices were displayed in fractions, but since 2001, all prices are shown in decimals.

Watching the ticker tape, especially one that is color-coded, can help investors gauge overall market sentiment at any moment. Ticker-tape data also helps technical analysts evaluate stock behavior using charts.

Before information could be transmitted electronically, brokers whose offices were closer to the stock exchange had an advantage because they received the latest trading data sooner than brokers located further away.

Reading the Ticker Tape

As an example of what data appears on a ticker, refer to the image below depicting a trade reported in Microsoft Corp.

• Ticker symbol: The unique characters used to identify the company's stock.
• Shares traded: The volume for the trade being reported. Common abbreviations are K = 1,000, M = 1 million and B = 1 billion
• Price traded: The price per share for the particular trade (the last bid price).
• Change direction: Shows whether the stock is trading higher or lower than the previous day's closing price.
• Change amount: The difference in price from the previous day's close.

Quote Priority

The order with which stocks and prices appear on the ticker tape matters, since there is limited space and the information is provided sequentially, in turn. With the millions of trades going on in thousands of stocks each trading day, which data gets included and when?

Most often, data on the ticker tape is prioritized by most active stocks by trading volume, largest price change movers, widely-held stocks, unusually large orders, or stocks with headlines in the news.

History of the Ticker Tape

The first telegraphic ticker tape was created by Edward Calahan in 1867, and Thomas Edison improved upon Calahan’s invention and patented it in 1871. Much of the technology underlying the original ticker tape system was based on telegraph wires. The original systems used specialized keyboards that converted stock data into morse code that was then read by the machine on the other end.

Ticker-tape machines introduced in 1930 and 1964 were twice as fast as their predecessors, but they still had about a 15-to-20 minute delay between the time of a transaction and the time it was recorded. Mechanical ticker tapes gave way to electronic ones in the 1960s. During the late 19th century, most brokers who traded at the New York Stock Exchange (NYSE) kept an office near it to ensure they were getting a steady supply of the tape and the most recent transaction figures of stocks. It wasn't until 1996 that a real-time electronic ticker was launched. These up-to-the-minute transaction figures—namely price and volume—are seen today on TV news shows, financial wires, and websites.

These latest quotes were delivered by messengers, or "pad shovers," who ran a circuit between the trading floor and brokers' offices. The shorter the distance between the trading floor and the brokerage, the more up-to-date the quotes were.

How Do You Read Ticker Tape?

Ticker tape feeds show a stock symbol based on its ticker on exchanges. Next to the symbol, it will show the price of the last trade, along with the volume, and whether or not the trade was an up- or downtick along with the change in price from the open.

Who Invented the Ticker Tape Machine?

The first ticker tape machine was invented in 1867 by Edward A. Calahan, and was later upgraded and improved upon by Thomas Edison.

What was the First Ticker Tape Parade?

The first official ticker tape parade took place in New York City in 1919 upon the return of World War I veterans to the U.S. Some say that the practice, however, pre-dated this with New Yorkers tossing streamers of ticker tape out of high-rise windows as early as 1886 to commemorate the dedication of the Statue of Liberty.