What is a Tick

Edison Stock Telegraph Ticker
Edison Stock Telegraph Ticker

A tick is a measure of the minimum price movement for any given security. It is used to measure changes in stock prices and provide investors with an indication of how volatile the market may be at any given time. The term "tick" comes from the sound made by old-fashioned ticker tape machines, which were used to record transactions on paper tapes that ran through them.

Ticks are usually measured as fractions or decimals, depending on what type of asset it refers to and its liquidity level. For example, stocks have a fractional tick size (0.01) while futures contracts tend to have decimal ticks (0.005). Generally speaking, more liquid assets will typically have smaller ticks than less liquid ones since they can move more quickly when there's high demand or supply pressure present in the market at a particular moment in time.