I have been trading securities for more than 30 years and the term tick is firmly etched into my brain. A tick is the term applied to a single trade execution. A single tick does not mean a single share or a single contract – rather it means a single trade at a specific price – irrespective of the quantity involved. So a tick in the US Bond futures can be for a single contract at the indicated price – or for 50 contracts at the indicated price.

When I started trading FOREX I had to learn a new term, “pips”. Baasically, a pip is the minimum amount that a FOREX can move at any tick. I still use the term tick to denote the single trade of whatever quantity, but refer to pips when referencing the potential of a trade. In most FOREX markets we trade the tick is usually more than one pip – because the spread is often several pips. In many futures markets the spread is usually a single tick – and for each market that single tick represents the same amount of money. FOREX ticks are usually for a variable amount of money, so that is why we refer to pips when talking about trade potential and results. Also a pip represents a different amount of money for each FOREX pair traded.

Occasionally we may mix up the terms a bit in writing about trading. Keep all this in mind when reading our Blog posts.

 

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