10 min Read (With relevant Youtube videos, sub-reddits and flow charts)
TL;DR
- A trading tick is the smallest price move allowed on the exchange.
- SEBI’s April 2025 reforms revised tick sizes by price range—impacting costs, liquidity, and short-term trading strategies.
- Tick trading targets tiny price shifts, but success demands speed, precision, and solid risk control
Understanding the concept of a "trading tick" is crucial for anyone involved in the stock market—whether you’re a seasoned trader or just starting out. Recent changes by SEBI and the NSE have made this topic even more relevant, impacting how trades are executed and how strategies are built. Let’s break down what a trading tick is, why it matters, and how the latest regulatory updates affect your trading decisions.
What is a Trading Tick?
A trading tick is the smallest possible price movement a financial instrument—like a stock, index, or derivative—can make on an exchange. This minimum increment is known as the tick size.
For example, if a stock has a tick size of ₹0.05, its price can only move in multiples of ₹0.05 (e.g., from ₹100.00 to ₹100.05, not ₹100.02).
Tick size is determined by the exchange and can vary depending on the asset class, security price, and market segment. It acts as the building block for all price changes and order placements in the market.
Why is Tick Size Important?
Tick size plays a key role in:
- Liquidity: Smaller tick sizes mean tighter bid-ask spreads, making it easier for buyers and sellers to agree on prices, which boosts market liquidity.
- Market Efficiency: Fine tick sizes allow for more precise price discovery and better order matching.
- Volatility: Larger tick sizes can reduce market noise and excessive volatility, but may also limit trading opportunities.
- Trading Costs: The tick size directly impacts the cost of entering and exiting trades, especially for high-frequency or intraday traders.
How Tick Trading Works
Tick trading is a strategy focused on exploiting these tiny price movements. Here’s how it typically works:
- Market Monitoring: Traders use real-time data and chart patterns to spot short-term price fluctuations.
- Rapid Trades: Orders are executed quickly to capture small profits from each tick movement.
- Volume-Based Profits: The goal is to accumulate gains through a high number of trades, rather than waiting for large price swings.
- Risk Management: Because of the frequency of trades, strict stop-loss and take-profit levels are essential.
A reddit thread: You use a tick chart? Can you explain how and why?
While some traders spend hours tracking tick charts, monitoring order books, and decoding sentiment manually, others have moved on to smarter ways. Platforms like Finosauras allow traders to skip the noise and focus only on high-conviction, advisor-backed trade setups—especially useful in tick-sensitive strategies where timing is everything.
Recent SEBI and NSE Tick Size Changes (April 2025)
From April 15, 2025, the NSE revised tick sizes for stocks, indices, and derivatives. The new tick sizes are based on the price of the security as of March 28, 2025.
Here’s a summary:
| Security/Segment | Price Range | Old Tick Size | New Tick Size |
|---|---|---|---|
| Index Futures | 0–15,000 | 0.05 | 0.05 |
| 15,001–30,000 | 0.05 | 0.1 | |
| >30,000 | 0.05 | 0.2 | |
| Stock Futures/Cash | <250 | 0.01 | 0.01 |
| 250–1,000 | 0.05 | 0.05 | |
| 1,001–5,000 | 0.05 | 0.10 | |
| 5,001–10,000 | 0.05 | 0.5 | |
| 10,001–20,000 | 0.05 | 1 | |
| >20,000 | 0.05 | 5 |
Note: Options contracts will continue to have a uniform tick size of ₹0.05
Impact:
- Traders dealing in high-value stocks and index futures must adjust their order placement and strategy execution.
- The changes are designed to align Indian markets with global standards, improve price efficiency, and reduce unnecessary volatility.
Youtube Video: Watch what is a tick in Trading
Components of Tick Trading
To succeed in Tick Trading, traders must understand and effectively utilize several key components that form the backbone of tick trading:
Types of Tick Trading Strategies
How to Use Tick Size in Your Trading Strategy
- For Active Traders: Smaller tick sizes enable more frequent trades and finer entry/exit points, but transaction costs can add up.
- For Long-Term Investors: Larger tick sizes may help reduce noise and make price movements more predictable.
- For All Traders: Always factor tick size into your risk management and position sizing.
“Tick-level trading is best suited for algos with high-speed infrastructure—not retail traders operating manually. At Finosauras, we help retail traders focus on what works: tracking real-time advisor performance and market sentiment to make smarter, data-backed decisions.”Sarthak Joshi, Co-Founder & COO, Finosauras
Risks Involved in Tick Trading
While tick trading offers the potential for frequent, small profits, it comes with significant risks and challenges:
Tick trading can be rewarding for those with the right skills, discipline, and technology, but it is not suited for everyone. Understanding the types of tick trading and the associated risks is essential before getting started.
Conclusion
What seems like a minor number—tick size—has a major impact on how markets function and how traders operate. With SEBI’s April 2025 reforms redefining tick sizes across segments, understanding this micro-structure is no longer optional—it’s essential.
For active traders, adapting to new tick sizes means recalibrating entries, exits, and risk controls. For long-term investors, it influences how price movements are interpreted. And for everyone in between, it’s a reminder that even the smallest unit in the market can shift how strategies play out.
In today’s fast-moving trading environment, success doesn’t just come from spotting patterns—it comes from staying informed, adapting fast, and using tools that turn raw data into real insight.
FAQs
1. What is a tick in trading?
A tick is the smallest possible price movement of a security, determined by the exchange.
2. Why did SEBI and NSE revise tick sizes in 2025?
The revision aims to align Indian markets with global best practices, improve liquidity, and control volatility.
3. How does tick size affect my trading?
Tick size influences liquidity, trading costs, and the precision of your entries and exits. Adjust your strategy according to the tick size of the securities you trade.
4. Where can I check the tick size for a specific stock?
You can check the tick size for a specific stock on the NSE website or through your broker’s trading platform, where tick sizes are listed and updated monthly based on the stock’s closing price
5. Do tick sizes change for options contracts?
No, tick sizes for options contracts generally do not change as frequently as those for stocks or futures. In India, options contracts have a standardized tick size, which is typically set at ₹0.05 or ₹0.10 depending on the specific contract and its price level
Curious how real traders are adapting their strategies to the new tick sizes?
Explore live sentiment and trade ideas at Finosauras