Tick ​​- Definition

It is likely that, when starting in the world of trading, you will come across some concepts that are a bit strange or difficult to understand. Here we will talk about the Tick, one type of indicator is that it is important to take into account when making financial and investment decisions.

➡✨ What is the Tick?

The shortest definition is that the Tick represents a variation between two consecutive prices of instruments or assets. This indicator is used to validate price changes both up and down, being a good way to visualize the changes. One of the clearest differences that we find in the Tick is the fact that this indicator is not limited to a unit of time. That is to say, it is not limited to a month, a year or a day, but rather, it operates in a timeless way in a different graphic from the classic ones. When we have a chart with units of time, it is generally a grouping of Ticks, which allows us to better visualize their changes over time. But individually, a Tick does not need a time parameter as it measures consecutive price changes.

➡✨Tick size

You must know that may vary in size according to the value of the instrument treated, although these cannot be smaller than the minimum price variation. In the OTC markets, its minimum size will depend on the setting of the minimum variation.

➡✨ How is it calculated?

Although this indicator is usually calculated by multiplying the size of the tick, the size of the standard contract and the size of your position, this can vary slightly. It is important to consider the market and the asset in which we are operating in order to have a better calculation of the tick.