Tick

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DEFINITION of 'Tick'

The minimum upward or downward movement in the price of a security. The term "tick" also refers to the change in the price of a security from trade to trade. Since 2001, with the advent of decimalization, the minimum tick size for stocks trading above $1 is 1 cent.

INVESTOPEDIA EXPLAINS 'Tick'

Prior to April, 2001, the minimum tick size was 1/16th of a dollar, which meant that a stock could only move in increments of $0.0625. Needless to say, while the introduction of decimalization has benefited investors through much better bid-ask spreads and better price discovery, it has also made market-making a less profitable (and riskier) activity.


The term "tick" is also used in reference to the direction of the price of a stock, with an "uptick" referring to a trade where the transaction has occurred at a price higher than the previous transaction, and a "downtick" referring to a transaction that has occurred at a lower price. In this context, the uptick rule refers to a trading restriction that prohibits short selling, except on an uptick, presumably to alleviate downward pressure on a stock when it is already declining.

RELATED TERMS
  1. Uptick

    A transaction for a financial instrument that occurs at a higher ...
  2. Tick Size

    The minimum price movement of a trading instrument. The price ...
  3. Bid Tick

    An indication of whether the latest bid price is higher, lower ...
  4. Tick Index

    The number of stocks trading on an uptick minus the number of ...
  5. Basis Point - BPS

    A unit that is equal to 1/100th of 1%, and is used to denote ...
  6. Downtick

    A transaction on an exchange that occurs at a price below the ...
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