Market StructurePrice Tick
Tick
A single change in the quoted price - in forex any new quote update, and on an exchange the minimum price increment.
What Tick means
The word tick carries two related meanings. In spot forex it usually means an individual price update: every time a new bid or ask arrives from the aggregated feed, one tick is recorded. On regulated exchanges it means something stricter, the minimum permitted price increment for a contract, so prices can only move in whole numbers of ticks and each tick has a defined monetary value.
Ticks matter because they are the raw material of everything else on a chart. Candles, indicators and tick-volume counts are all built by aggregating ticks over a period. Two brokers can therefore produce slightly different charts for the same pair, since each receives a different stream of updates from its own providers. That is also why backtests run on tick data from one source may not reproduce exactly on another, and why tick counts are not comparable across platforms.
Worked example
EUR/USD moving from 1.08501 to 1.08503 to 1.08502 registers three ticks; on the corresponding euro futures contract the minimum tick is 0.00005, worth 6.25 US dollars.
Related terms
- PipThe standard smallest conventional price increment in a currency pair - the fourth decimal place, or the second on yen pairs.
- PipetteOne tenth of a pip - the fifth decimal place on most pairs and the third on yen pairs.
- VolumeA measure of trading activity - genuine contracts traded on an exchange, but only tick counts on a retail forex platform.
- Currency FuturesStandardised, exchange-traded contracts to exchange currency at a set price on a fixed future settlement date.
- BacktestingReplaying a strategy's rules over historical price data to estimate how it would have performed before risking real money.
Frequently asked questions
What does Tick mean in forex trading?
A single change in the quoted price - in forex any new quote update, and on an exchange the minimum price increment.
How does Tick work in practice?
Ticks matter because they are the raw material of everything else on a chart. Candles, indicators and tick-volume counts are all built by aggregating ticks over a period. Two brokers can therefore produce slightly different charts for the same pair, since each receives a different stream of updates from its own providers. That is also why backtests run on tick data from one source may not reproduce exactly on another, and why tick counts are not comparable across platforms.
What is an example of Tick?
EUR/USD moving from 1.08501 to 1.08503 to 1.08502 registers three ticks; on the corresponding euro futures contract the minimum tick is 0.00005, worth 6.25 US dollars.
Trade with a regulated broker
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