Ways to read stock quotes

 Unless you are a passive investor that requires the services of a stockbroker to help you invest, it is important that you learn how to read stock quotes. Initially, stock quotes may seem difficult and confusing, but once their components are broken down, they become an effective tool in assessing a company.

Understanding Stock Quotes

Typically, when you place an order to buy or sell a specific stock you will be presented with vital information such as the company’s ticker symbol. Its security or interest, the price that the buyer/seller is willing to buy or sell the shares, and the number of shares to buy or sell. All these are shown as last trade, trade time, change, previous close, open, bid, ask.

A lot of stock quotes show the number of shares that are available for trading at the bid and ask price. The bid and ask prices represent the highest (bid) price and the lowest (ask) price for a security or stock. For example, the bid price of Apple’s stock may be $137, that’s the price sellers are willing to sell. While the ask price maybe $133.4, that is the price the buyers are willing to buy.

Stock prices are mostly determined by changes in demand and supply. The more investors demand to buy shares, the value and price of the security increases, and vice versa. 

1.    Stock Quotes Layout

All stock quotes follow a similar format, whether you’re using Google Finance, Yahoo Finance, or Investingport.com. There are certain pieces of information that must be included in a stock quote. A typical stock quote has the name of the company being traded at the top of the quote. For example, Microsoft. Next is the ticker symbol which reads “NASDAQ: MSFT” which indicates that the stock trades on the Nasdaq exchange.

Represented on a stock quote are numbers which are divided into two columns. The left column concentrates more on the basic facts while the right column shows more analysis of the facts.

1.    Last Trade

To know the current price of a stock, you have to know the price of the last trade. The last trade shows the last price that a single share of a particular stock was sold at. It can change instantly. Buyers and sellers have the leverage of determining the worth of a stock at any given time.

1.    Trade Time

In determining a stock price move based on the last trade, the trade time must be in line with the last trade. An outdated trade time will not effectively guide your decisions in predicting a stock price movement. The trade price shows you whether or not you should rely on the last trade price. It is very common to have a trade time lag some minutes behind your actual time, however, it is best to use the most recent trade time.

1.    Change in stock price

This shows the difference between the current last traded price and the previous last trade price. Some people do not consider this as an important indicator of a stock’s performance as it only shows the stock history of the last two minutes. Notwithstanding, it can still be used alongside other indicators.

1.    Prev. Close

The previous close shows the price that the last share of stock was sold on the previous day or last day of trading. It is only useful within a 24-hour period and may be quite limiting in the big picture of understanding stock performance.

1.    Open open price

The open price is the price of the first share of stock sold on a new day.

1.    Bid & Ask Prices

The Bid price is the highest price a share of stock can be sold at, while the asking price is the lowest price a stock can be sold at. In most cases, the bid and ask sections on a stock quote are usually blank or shown as ‘N/A’. The bid and ask price are decided and negotiated between a buyer and a seller. This is a term used for buying a selling price of a stock.

1.    Day’s Range price fluctuation 

On the right side of the stock quote is the day’s range which shows you the range of how a particular stock price may have varied within the course of a trading day. Making conclusions only on the current price of a single share will not give you the full picture of what to expect before the day runs out.

1.    52wk Range (52 Weeks high and 52 Weeks low)

The 52wk range (or 52 week range) is similar to the day range in the sense that it shows the range of prices of a stock over the course of 52 weeks or the last year. The information provided in the 52wk range is useful. However, in such a time as this where the market has seen its lowest points, using a 52-week range may not be as effective as using a day’s range.

1.    1y Target Est

The 1-y target est. (or one-year target estimate) is formed based on analysts’ projection of what the price for a single share of stock could be one year from today. Their projections vary by analysts because of the variables in the market. One year targets can also be limited and may not be reliable enough.

1.    Volume

A stock’s volume shows the total number of shares that a stock may have traded throughout a single trade day. The volume of a stock can be affected by major company news. For example, good news could cause many investors to pick interest in the company’s shares. While bad news could cause investors to unload a particular stock.

1.    Market Cap

Market capitalization shows the total dollar value of the company’s stock that is being traded. It can be determined by multiplying the total number of shares by the last trade.

1.    EPS Earning per share 

Earnings per share (EPS) is the amount of money that you can earn on a share if you purchase a share of stock last quarter and sold it today. EPS is a vital indicator that shows how a stock will perform if you sell it within a short time or hold over the long-term.

1.    P/E - Price per earning 

The price-to-earnings (P/E) ratio shows the relationship between the price per share and the income earned per share in a company. A higher price-to-earnings ratio indicated a more expensive stock because the investors pay more per unit of income.