Tick size

Tick size is like the steps you take when you walk. Imagine you are walking on a path and every time you move your foot, you take a step forward. The distance between each step you take is like the tick size.

Now let's say you have a toy car that can move forward in small increments, just like taking small steps. The tick size for the toy car would be the smallest distance it can move forward.

In the stock market, tick size is like the minimum amount the price of a stock can change. It's like a tiny step forward or backward for the stock's value. This tick size is usually determined by the stock exchange where the stock is traded.

For example, let's say the tick size for a certain stock is $0.01. This means the price of the stock can only change by increments of one cent. If the stock is currently trading at $10.00, the next possible prices for the stock would be $10.01, $10.02, $9.99, or $9.98, depending on whether the stock is going up or down.

So just like taking smaller or larger steps when you walk, tick sizes help us understand the smallest movements in stock prices.