What is a Plus Tick
A plus tick is an indication that a security is trading at a higher price today than it was the previous day. Any increase in price or value from the previous day is considered a plus tick.
BREAKING DOWN Plus Tick
A plus tick, also known as an uptick, designates that a specific security has gone up in sales price between yesterday and today. There are rules in place to determine the tick status, which will then impact the types of trades that are allowed on that security. In addition to the plus tick, there is a downtick, which refers to a security transacting at a lower price point from yesterday to today.
Markets have varying tick sizes. While plus tick and downtick are indicators of the overall daily adjustment, different markets assign different values to the securities that are traded within them. A plus tick in one market will have a different monetary value than a plus tick in another market. As an example, the measure of a tick on the S&P 500 is 25 cents whereas a gold futures tick is 10 cents.
The Securities and Exchange Commission (SEC) is currently exploring a pilot system that allows for larger tick points for smaller stocks. The pilot is expected to gather data for approximately two years before evaluating how to move forward. The pilot program began collecting Data in April of 2016 and implementation for the pilot began in October 2016. The pilot should complete the research phase in October 2018 with the SEC collaborating with national securities exchanges and the Financial Industry Regulatory Authority (FIRA) to decide how to move forward based on the findings.
What is a Bid Tick
A bid tick is measurement of the movement of bid prices. It is used to determine if they are higher, lower or unchanged from the previous bid price. The bid tick index has a short life span and only remains accurate for short periods of time thanks to frequent market fluctuations.
The bid tick is most relevant for day traders who need to consider the entire market at a given time. They will be on the look out for any bulk purchases or sales during this time. Bid ticks have maximum movements. For example, if a stock is going for $5 and has a $1 tick size, the next bid amount would need to be made at $6 as opposed to $5.01. Investors use the bid ticks to gauge how the market will move and gather an idea of what the spread will be between bids and asking prices.