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Tick

Minimum price increment allowed for a contract, defining the smallest possible price movement and order granularity.

A tick is the smallest possible price movement of a trading instrument, reflecting market granularity and affecting profit or loss calculations.

For example, in WTI crude futures, a tick may represent a $0.01 per barrel price movement, translating to a defined monetary value per contract. Traders track ticks for precise execution, scalping, or arbitrage strategies.

Tick size influences liquidity, volatility perception, and trading costs. Smaller ticks allow finer price adjustments, while larger ticks simplify calculations but may reduce pricing precision.

Understanding tick behavior is crucial for position sizing, risk management, and order execution, especially in high-frequency or short-term trading of commodities, derivatives, and financial instruments.

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