Tick Test Rules

Filed Under »
Dictionary Says

Definition of 'Tick Test Rules'

A now defunct rule that placed restrictions on when a short sale may be executed. Tick test rules dictated that a short sale could be made only in two situations:

1. When the price of the particular stock was higher than the last trade price (an uptick).

2. When there was no change in the last trade price. The previous trade price had to be higher than the trade price that preceded it (a zero uptick or zero plus tick)

Also known as the "short sale rule".
Investopedia Says

Investopedia explains 'Tick Test Rules'

This rule was intended to prevent investors from destabilizing a stock's price when it was falling. However, on July 6, 2007, the Securities and Exchange Commission struck Rule 10a-1, the regulation that put the uptick restrictions in place, from the books.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Naked Shorting

    The illegal ...
  2. Uptick Rule

    A former rule ...
  3. Short Covering

    Purchasing ...
  4. Short Interest

    The quantity of ...
  5. Short Interest Ratio

    A sentiment ...
  6. Short Interest Theory

    An investment ...
  7. Short-Sale Rule

    A Securities and ...
  8. Short Sale

    A market ...
  9. Short Squeeze

    A situation in ...
  10. Zero Plus Tick

    A security trade ...

Articles Of Interest

  1. Short Selling Tutorial

    Want to profit on declining stocks? This trading strategy does just that.
  2. The Uptick Rule: Does It Keep Bear Markets Ticking?

    This rule prevents traders from driving stocks down, but its effect on market volatility is debatable.
  3. The Uptick Rule Debate

    This rule was deemed ineffective and repealed in 2007, but critics argue it protects the market from bear raids.
  4. Triple Screen Trading System - Part 4

    How can a trader use the Elder-Ray oscillator as the second screen of this system? Find out here.
  5. Investors: Rely On Your Gut

    Find out how your personality and natural instincts can direct your investment choices.
  6. Trade On Support For The Best Exit Strategy

    Find your sound exit strategy based on support and resistance levels, while understanding the psychology behind them.
  7. Short Sales For Market Downturns

    This strategy can help in market downturns, but it's not for inexperienced traders.
  8. How To Talk Like An Investor

    Learn all the lingo you'll need to start investing or to impress your coworkers around the water cooler.
  9. Hedging Basics: What Is A Hedge?

    This strategy is widely misunderstood, but it's not as complicated as you may think.
  10. Hedge Against Exchange Rate Risk With Currency ETFs

    Currency moves are unpredictable and can have an adverse effect on portfolio returns. Find out how to protect yourself.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center