How to Read Stock Quotes

Stock quotes have changed more than any other factor in the stock market. While the overall stock markets have stayed the same over the centuries, how we receive stock quotes has certainly changed. Not too long ago in January 2001, stock quotes underwent a whole new change from the traditional fractional quote to the decimal system that we use today. This was just one way the stock market has changed to benefit the at-home, electronic trader.

Stock quotes are prices

A stock quote is simply the amount it will cost you to buy or sell a stock. They usually come in two parts: a bid price and an ask price representing are the current trading price for the stock on the market. The bid price is the amount of money that people are bidding (i.e. paying) for the stock, the ask price is the price that current stock owners are asking (i.e. selling) for their shares. The difference between the bid price and the ask price represents the spread, which is how many market makers make their money. They pair your order up with an order from someone else and collect the difference in between the two values.

A stock quote is not locked in; it is usually the current bid and ask price that you may or may not choose to use when you open a position. Generally, bidding an amount equal to the current ask price will guarantee that you get an instant fill on your order, but at a higher cost than you might have liked. On the other side, bidding the bid price will put your order at a lower price than sellers are willing to take and may cause a delay in getting your order filled.

Stock quotes have improved

Thanks to the electronic era, there have been many developments in the quality and timing of stock quotes. Most online brokerages offer free quotes to active traders, as well as Level II quotes on NASDAQ stocks. Level II quotes are the fastest and most reliable quotes that are only offered on the NASDAQ market, which is entirely electronic. Because the NASDAQ is all electronic without the help of a market maker, Level 2 quotes are extremely accurate, and there is usually minimal spread between the bid and ask prices.

How to get a stock quote on a stock

To get a stock quote, you first need to find the ticker symbol of the stock you wish to buy and sell. This is a three letter combination for NYSE stocks and a four letter combination for NASDAQ stocks. This ticker symbol is what is used on the stock market to identify shares of a certain company; no two ticker symbols are alike. Once you have the ticker symbol, you can enter it into any of the thousand of free stock quote sites that exist on the internet. After doing this, a quote will be sent back of the bid and ask prices and sometimes even how many shares are up for sale at a certain price.

Finding a stock quote is made even easier by the availability of the internet, and you can instantly view how much buyers are willing to pay for a stock, as well as what price sellers are willing to part with their holdings.