The smallest change a price can show:a tick, one step, up or below.
The minimum price change for a currency pair, smaller than a pip.
Most brokers now quote prices to five decimal places, where the fifth decimal represents a fractional pip or tick.
In plain words
A tick is the smallest step by which a quoted price can change. Where a currency pair is quoted to five decimal places, the last digit is one tenth of a pip, and a move of one in that digit is one tick. The word is also used for each single update of the price.
See it move
One tick is about a tenth of One pip (as in the lesson)
Why it matters
Platforms record every price update as a tick, which is where terms such as tick chart and tick volume come from. Knowing the smallest step also explains why spreads and price changes are often shown in fractions of a pip.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
EUR/USD moves from 1.10000 to 1.10001 while a trader holds one standard lot.
- 1Change1.10001 − 1.10000 = 0.00001, one tenth of a pip.
- 2Value on one standard lot100,000 × 0.00001 = 1 US dollar.
- 3Ten such steps make one pip, worth 10 US dollars.
One tick on this quote changes the value of a standard lot by 1 US dollar.
A common mistake
A tick and a pip are not the same thing. On a five-decimal quote a pip is still the fourth decimal place, and ten of the smallest steps make one pip.
Check yourself
Educational information, not investment advice or a recommendation to trade.