Tick SizeMPV
Tick size is the smallest price increment an instrument can move in, such as $0.01 for many US shares or 0.25 points for some index futures.
Tick size is the smallest step a price can move. Many US shares quote in $0.01 steps, while futures contracts set their own ticks, such as 0.25 points on some index futures. Tick sizes set the narrowest possible spread and differ by country, exchange and product.
- Category
- Market Structure
- Reading time
- 3 min
- Also called
- Minimum price increment, Minimum tick
- Updated
Tick size in plain words
In the US, Rule 612 sets the smallest price step at one cent for quotes and orders in listed stocks priced at $1 or more.1
That means the spread on these stocks can't be smaller than a cent.1
In 2024, the SEC added a half-cent tick ($0.005) for quoting certain stocks.1
How to use tick size
Find the tick
Check the contract or exchange specs.
Know the US rule
Know the default: one cent for stocks priced at $1 or more.1
Know the spread floor
So the narrowest possible spread is one cent.1
Check for half-penny ticks
Check whether the stock qualifies for the newer half-cent tick.1
Compute tick value
Tick value = tick size × multiplier × contracts.
Round orders
Place prices on valid ticks.
Worked examples
Example 1 — Stock
0.01Hypothetical stock at 42.17; next valid prices 42.16 or 42.18.
| Tick | 0.01 |
At $1 or above, prices move in steps of at least one cent.1
Example 2 — Hypothetical futures
+200Tick 0.25 points, multiplier 50, 2 contracts, move of 8 ticks.
| P&L | 8 × 0.25 × 50 × 2 = 200 |
Each tick has a fixed money value, so ticks turn price moves into P&L directly.
Example 3 — Spread floor
MinimumA hypothetical stock bids 10.00 and offers 10.01.
| Spread | 0.01 |
The spread was already one cent, so it couldn't get any tighter.1
Tick size vs tick value
| Aspect | Tick size | Tick value |
|---|---|---|
| Meaning | Smallest price step | Money per tick |
| Unit | Price points | Currency |
| Depends on | Exchange rule | Contract multiplier |
| Example | 0.01 | Hypothetical 12.50 |
Where tick size matters
Spreads
Sets the floor of the Bid-Ask Spread.
Futures
Converts moves on Futures Contract into money.
Stops
Placing a Stop Loss on valid ticks.
Sizing
Used in Position Sizing.
Advantages and disadvantages
Advantages
- Standardises prices.
- Makes risk easy to compute.
- Supports orderly order books.
Disadvantages
- Large ticks can widen costs.
- Small ticks can thin each price level.
- Rules differ by country and product.
- Tick changes can confuse algorithms.
Going deeper
Read as far as you need. Each level builds on the one before it.
US rule
Beginner
The one-cent minimum applies to quotes and orders in stocks priced at $1 or more.1
Sub-penny
Intermediate
Some stocks now quote in half-cent steps under the 2024 change to Rule 612.1
Measuring
Advanced
Which stocks qualify depends on their average quoted spread over regular trading hours, weighted by time.2
Common mistakes
Mixing tick size and value
They differ.
Orders off tick
May be rejected.
Assuming all products tick the same
Check specs.
Ignoring rule changes
Ticks can change.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Tick size is the smallest price step.
- US stocks over $1 usually use $0.01.
- Some stocks may use $0.005.
- Tick value turns ticks into money.
- Rules differ by country and product.
Frequently asked questions
Is a tick the same as a pip?
Can tick sizes change?
Where do I find tick size?
Further learning
- Pip Value
Forex equivalent.
- Futures Contract
Contract specs.
- Bid-Ask Spread
Spread floor.
- Position Sizing
Risk per tick.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- U.S. SEC. Fact Sheet: Minimum Pricing Increments, Access Fee Caps, and Transparency (Release 34-101070) (opens in a new tab) Checked .
- U.S. SEC (eCFR). 17 CFR 242.612 — Minimum pricing increment (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.