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Has three DIFFERENT meanings: 1) the minimum price movement of an instrument, 2) a completed trade of an instrument, 3) an index of the net of stocks trading on an up tick less those trading on a down tick.

1) The minimum price movement of an instrument.

Tick size is the minimum amount that price of the instrument can change.

Tick value is the cash value of one tick.

For example s&p 500 mini futures has a tick of 0.25, this mean the price can change of an incremental of 0.25 or 1/4 of point, and the tick value is $12.50.

In forex a TICK is called a PIP.

A Point is not necessarily the same as a TICK. For instance with the S&P 500 emini a TICK is $0.25, but a Point is $1.00, whereas with Crude Oil (CL) a Point and TICK are the same ie $0.01.

See also Handle.

2) A Trade of a financial instrument.

A TICK in this case refers to one completed trade between buyer and seller. Many traders chart price based on TICK charts (or Number of Trades - which is a clearer definition) ie they may configure their chart to start a new bar after every 2,000 Trades (TICKs) have been completed. In this use of the term TICK, the minimum price movement is irrelevant - many would suggest this use of the word TICK is confusing and Number of Trades or a Trade is far clearer.

There is a technical problem with counting TICKs or Number of Trades ie what constitutes 'a trade'? Say you have a Seller of 10 contracts at $100 and those 10 contracts are bought by 3 Buyers (one buys 2 contracts, another buys 7 contracts and the 3rd buys 1 contract - all at $100) is that ONE TICK (Trade) or THREE TICKs (Trades). Unfortunately different exchanges and data feed providers will deliver it either way. So TICK or Number of Trade charts can be meaningless as different traders will be looking at different charts.

This thread details the issue re the CME data for Tick/Trades: https://futures.io/brokers-data-feed...-protocol.html

3) TICK index:

This is a real time index with a snapshot taken frequently during the trading day of the number of stocks (on a given exchange) trading on an Up Tick less those trading on a Down Tick. An Up Tick means that the particular stock is trading at a price higher than what it last traded at (reverse for Down Tick). But again the use of TICK in this case is also confusing as a stock may have traded at a higher price but that price maybe more than the TICK size ie it may have skipped a couple of minimum price increments.

Many traders chart the TICK index looking for clues from the price changes of the underlying stocks to see what might happen to the futures price - common approach is looking for divergences between a TICK index chart and the Futures index chart.

Like 2) above the use of TICK index charts can be next to useless as there is no standard definition of how the index should be calculated ie it is NOT produced by the exchange instead each data feed provider calculates their own (if they provide one at all). Things like the refresh rate (snapshot - how often do they calculate it), pre open movements (in or out), stocks that have not changed in price, and the opening rules (what happens at exchange open when there are no trades to compare it to) all effect the index composition. This is to say nothing of the fact that often the Futures price is leading the price and the underlying stocks/exchange follow the Futures.

Created by  LukeGeniol , September 8th, 2010 at 06:08 PM
Last edited by  steve2222 , July 5th, 2016 at 05:48 AM
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Tick Value LukeGeniol Terms (Glossary) 0 September 8th, 2010 06:30 PM

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