What is Ticker Tape? Share Market Significance Explained

Have you ever wondered about the continuous display of stock price on a financial news channel or the ribbon of stock prices on major stock exchanges of the world? Ticker tape is even displayed in movies to portray the securities market.

They are widely used and globally accepted in the securities market. While most financial enthusiasts may have tracked the ticker tape at some point in their trading journey, very few know about the history of ticker tape, its significance, and quote priority.

What is ticker tape?

Ticker tape is a ribbon that displays the price movement in individual stocks on a continuous, real-time basis. It also linearly disseminates price quotes and provides market information to investors. Today, the ticker tape is electronic, a computer device is used to transmit information to investors around the world.

Understanding Ticker Tape in Share Markets

Typically, a ticker tape displays the following items:

• Stock Symbol – Each entry on the ticker consists of a stock symbol that denotes the company whose stock has been traded. The stock symbol is a unique code.
• Volume – The number of shares being traded.
• Share Price – The price per share at which a trade is executed.
• Visual Cue – Generally, a triangle is displayed as a visual cue. It depicts whether the trading price is above or below the closing price of the previous day.
• Delta – This is the difference between the trading price and the closing price of the previous day.
• Colour-Coded – Green is used if the trading price is higher than the closing price of the previous day whereas red indicates that the trading price is lower than the closing price of the previous day. Blue is used in case the trading price is the same as the closing price of the previous day.
• Decimals – Trading prices are displayed in decimals.

The primary purpose of ticker tape is to display the current market price of a security viz-a-viz the closing price at the end of the previous trading day.

Additionally, the constituents of ticker tape assist investors in gauging the overall market sentiment at that time. Ticker tape data is used for technical analysis, predicting future price movements and analyzing stock behaviour.

Ticker tape is especially useful for those who are beginners in the stock market since it constantly displays information about the most active securities.

Quote Priority

In India, there are more than 1300 securities that are available for trading on the National Stock Exchange. Since there is limited space, the priority for the display of stock prices gains significance.

Data on the ticker tape is prioritized by the most active stocks. Usually, the volume of shares is considered while determining the priority for the display of prices. Large price movements, widely held stocks, stocks with headlines in the news and large price movers are contributing factors that may lead to active trading.

Evolution of Ticker Tape

Initially, stock prices were delivered through written or verbal messages. The time taken for distributing stock quotes was considerably high whereas the span for which stock quotes were useful was very limited. Hence, stock quotes were not shared over long distances.

Ticker devices were introduced to reduce the turnaround time associated with written and verbal messages. It also allowed for faster and more precise sales. The ticker ran continuously and updates to stock prices were much more effective. Overall, trading became more time-sensitive.

Ticker tapes appeared as a byproduct of ticker devices that printed a series of ticker symbols including the company’s name and information related to its price. The original ticker tape system was based on telegraph wires. The output was produced on a thin strip of paper called ticker tape. The word ticker is derived from the distinct tapping noise made by the machines during printing.

However, there was a time gap between the execution of a trade and the communication of the trading price on the ticker tape. Brokers whose offices were closer to the stock exchanges received the data sooner than brokers located further away.

Hence, ticker machines are obsolete and have been replaced by computer networks and televisions. Simulated ticker displays are used to publish data in real-time. These up-to-the-second price and volume figures are now displayed on websites, television news channels, and financial wires.

History of Ticker Tape

The history of the stock price ticker tape dates back to 1867, the prototype of a telegraphic ticker tape was created by Edward Calahan. In 1871, Thomas Edison improved upon and patented Calahan’s invention. The original system consisted of specialized keyboards that converted data relating to stocks into morse code. It was then read by the machine on the other end.

In 1930 and 1964, revised versions of ticker tape machines were introduced. The processing time of these machines was much faster than their predecessors. Although, there was still a 15–20-minute delay between the transaction time and the time it was recorded. During the late 19th century, brokers held offices close to the exchange to ensure the latest transaction data was available with the least amount of delay.

In 1996, a real-time electronic ticker was launched. Transaction details were updated up to the minute and were delivered by messengers who ran a circuit between the trading floor and the brokerage houses. Currently, quotes are continuously scrolling throughout the trading day showing current or slightly delayed data.

Reading the Ticker Tape

To understand how to read the ticker tape, let’s consider the following example – PELT 10K @ 1890 ^ 100

1. PELT – PELT refers to the ticker symbol and is used to identify the company whose stock is being traded.
2. 10K – 10K refers to the volume of trade being reported. Typically, K = 1000, M = 1 million and B = 1 billion. In this case, ten thousand shares are being traded.
3. @ 1890 – Rs. 1890 represents the price per share for a particular trade.
4. ^ 100 – The change in price from the previous day’s close is depicted. The change in direction indicates whether the stock is trading higher or lower than the previous day’s closing price. In this case, the symbol indicates that the trading price is higher than the closing price of the previous day by Rs. 100.

Conclusion

The advent of mobile apps and financial websites has reduced the dependency on ticker tapes considerably. Stock prices, trading volumes, and related details can be tracked efficiently at an individual scrip level. It is worthwhile to note that it is close to impossible to see the exact price and trading volume at the precise moment of trading. However, ticker tapes continue to be displayed and many believe they can provide significant insight and provides a general picture of the current activity of a stock.