A tick is the smallest possible price movement of a stock or other securities, according to Investopedia. This term can also be used to represent the changes in prices between trades. The ticks do not depend on whether the price moves upward or downward.
Example of a tick
Ticks vary in sizes and the types of securities or assets being traded. For example, the minimum fluctuation(tick) for DJIA Contract is 1.00 index points(which is equivalent to $10) whereas the E-mini S&P 500 futures contract has a tick of $0.25. This means that once the price moves up or down, the E-mini S&P 500 will move up or down $0.25 whereas the DJIA will move $10.
Is it important to know ticks values?
It is always important to know the price movement and increments in the price before it moves. This information will give you an edge over other traders and investors. That is, you will know when to make an investment and where to cut your losses when you have to. As a result, you will increase your odds of making profitable trades and investments.
