Definition: A tick in trading refers to the smallest possible price movement of a financial instrument, such as a currency pair, stock, commodity, or futures contract. It represents the minimum increment or decrement by which the price of the asset can change in a single transaction.
Understanding and monitoring ticks is crucial for effective trading, especially for high-frequency and day traders. Ticks provide valuable real-time data on price movements, helping traders gauge market activity, liquidity, and volatility. By analyzing tick data, traders can make informed decisions about entry and exit points, optimize their trading strategies, and manage risk more effectively.
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