Ticks and Tick Size

A tick is the smallest amount by which a price can change. If a stock's tick size is one cent, its price can move from $50.00 to $50.01, but not to $50.005. Every market has a tick size, set by the exchange or by regulation. The word is also used more loosely to mean a single price update, as in "the price ticked up", and in "tick charts" that draw a new bar after a set number of trades.

Tick size in different markets#

In the United States, Regulation NMS has long required a minimum price increment of one cent for stocks priced at $1 or more. In 2024, the SEC adopted changes that allow a half cent increment for some heavily traded stocks with very tight spreads.

Tick value: what one tick is worth#

For futures and other contracts, the tick value is how much money one tick move is worth per contract.

Tick value = Tick size × Contract multiplier

For stocks, tick value is simply the tick size times your number of shares: a one cent move on 500 shares is $5. See Tick Size and Tick Value.

Why tick size matters to traders#

It sets the minimum spread#

The Bid-Ask Spread can never be smaller than one tick. In very liquid markets, the spread is usually exactly one tick, and competition happens in the size waiting at each price rather than in the price itself.

It affects trading costs as a percentage#

A one cent tick is 0.1% of a $10 stock but only 0.002% of a $500 stock. Low priced stocks therefore often have higher spread costs in percentage terms, even when the spread is a single tick.

It shapes queues#

When the tick is large relative to the price, many orders crowd at each price level, and getting filled with a limit order depends heavily on your place in the queue. See Fill Probability and Queue Position.

It changes how stops and targets work#

Placing stops a tick or two beyond obvious levels, rather than exactly at them, is a common habit. In futures, traders often think in ticks rather than dollars because tick value is fixed.

Ticks, pips and points#

These words overlap and confuse many beginners:

• Tick: the smallest allowed price change in a market.
• Pip: in forex, traditionally the fourth decimal place (0.0001) for most pairs, or the second (0.01) for yen pairs. Brokers now quote a further decimal, a tenth of a pip, called a pipette. See Pips and Pipettes.
• Point: a whole unit of price, such as one index point. One E-mini point equals four ticks.

Tick charts and tick data#

• Tick data records every individual trade or quote, the most detailed price data available. See Tick Data and OHLCV Data.
• Tick charts create a new candle after a fixed number of trades, such as 500, instead of after a fixed time, so busy periods produce more candles and quiet periods fewer.

Tick sizes work alongside minimum trade sizes; see Tick Sizes and Lot Sizes for how both differ across markets.

Frequently asked questions#

What does tick size mean?#

It is the smallest price increment allowed in a market, such as one cent for most US stocks or 0.25 points for E-mini S&P 500 futures.

How much is one tick worth in futures?#

It depends on the contract: tick size times the contract multiplier. For the E-mini S&P 500 it is $12.50; for the Micro E-mini it is $1.25.

Is a tick the same as a pip?#

Not exactly. A pip is a forex convention, usually 0.0001. The actual minimum price change, the tick, is often a tenth of a pip at modern brokers.

Sources#

• Wikipedia, Tick size