Last Updated on September 27, 2023 by BFSLTeam BFSLTeam
As an investor, knowing just the current price at which a particular stock or security is trading may not be enough. In fact, you need access to plenty of other information to be able to make sense of a stock’s price like where the current stock price is relative to its 52-week high and low points. Here’s where stock quotes come into the picture.
Stock quotes have been designed to serve exactly this purpose; to provide investors with all the necessary information so that they make well-informed trading and investment decisions. Wondering what the meaning of stock quotes is and how important it is? Here’s a comprehensive guide that can help you understand what they are.
Also Read: What are FAANG stocks?
What is a Stock Quote?
A stock quote is a term that market experts use to collectively describe all trading-related information for a particular stock. It consists of a host of different stock-related data and is widely used by traders and investors as part of their decision-making process.
A typical stock quote, irrespective of the source, will contain information such as the current price of the stock, percentage change with respect to the closing price of the previous trading session and trading volume, among others. Additionally, it may also contain other supplemental information like dividend history and key financial ratios.
What Kind of Information Can You Normally Find in Stock Quotes?
As an investor, you need to know the type of information that stock quotes usually display. So, here’s a brief overview of some of the key data you can commonly find on a typical stock quote.
- Name of the Stock and Trading Symbol
One of the first things that stock quotes display is the name and trading symbol of the respective stock. The trading symbol, also known as a stock symbol or ticker symbol, is a unique arrangement of letters. The trading symbol is designed to make it easier to identify stocks with very similar names. For example, the trading symbol of the Steel Authority of India Limited is SAIL and the symbol of Infosys Limited is INFY.
- Last Traded Price
The price at which the last trade was executed is known as the last traded price or LTP. Every stock quote prominently displays the LTP of the respective stock beside the name of the company and its ticker symbol. The LTP is generally coloured in either red or green depending on whether the price is lower or higher than the previous day’s close.
- Percentage and Absolute Change
In addition to the LTP, stock quotes also display the percentage and absolute change in the stock price compared to the previous close. Similar to the last traded price, these figures are also coloured in either red or green depending on whether the price has increased or decreased in relation to the previous day’s closing price.
- Previous Close
The previous close indicates the closing price of the stock as of the previous trading day.
- Open
The open price indicates the price at which the stock opened on the given trading day.
- High
The high refers to the highest price the stock touched on the given trading day.
- Low
The low refers to the lowest price the stock touched on the given trading day.
- Close
The close refers to the closing price of the stock on the given trading day.
- VWAP
Also known as Volume Weighted Average Price, VWAP refers to the average price (in relation to volume) at which the stock is traded during the given trading day.
- Bid-Ask Spread
The bid-ask spread is a list of the top five bids and asking prices for a particular stock on a given trading day. Some stock quotes also provide the quantity for every single bid and asking price.
- Traded Volume
The traded volume refers to the total volume of shares that have been traded during the given trading day. The volume includes both shares that have been bought and sold. Most stock quotes provide the traded volume in both quantity and value.
- Market Capitalisation
Market capitalisation refers to the total value of the company. It is arrived at by multiplying the total number of outstanding shares with the last traded price (LTP).
- 52-Week High and Low
52-week high and low refers to the highest and lowest price that the stock touched during the previous 52-week period.
- Upper and Lower Bands
The upper and lower bands refer to the upper and lower price limits of the stock on the given trading day. These bands are set by the stock exchange. If the stock price exceeds either of these bands, the exchange would employ a circuit breaker, which temporarily stops trading.
- Stock Chart
The stock chart is a graphical representation of the price and volume data of the stock. Depending on the stock quotes used, the stock chart can either be a line chart, bar chart or candlestick chart. In addition to graphically representing the price movement of the given trading day, most stock charts also provide historical price movements.
- Key Financial Ratios
Almost all stock quotes also display the key financial ratios of the company. This includes the Price to Earnings (P/E) ratio, Price to Book (P/B) ratio and Earnings Per Share (EPS), among others.
- Dividend Yield
The dividend yield refers to the percentage of a stock’s price that the company pays out as dividends to its shareholders. For example, if a company has a dividend yield of 0.40, it means that it pays out a dividend of 0.40% of its prevailing market price.
- Beta or Volatility
Beta is a measure of a stock’s volatility. A beta value of 1.0 means that the stock is as volatile as the broad market. A value of less than 1.0 or more than 1.0 would mean that the stock is either less volatile or more volatile than the overall market.
Additional Read: What is the Wash Sale Rule?
Conclusion
Stock quotes offer important pieces of information right from the highs and lows to trading volume and market capitalisation. You can use the plethora of information from these quotes to plan your trading or investment decisions more accurately. Furthermore, most stock quotes display information in almost real-time, making it an invaluable source of information for traders and investors.
