i Short answer
A tick is the smallest possible price movement for a given instrument, sometimes used interchangeably with the pip.
Technically it's a more general concept that can differ in size across forex, indices, and commodities.
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1. The general tick concept explained across instrument types
A tick represents the minimum increment by which an instrument's price can change, functioning as a universal concept applicable across virtually any tradeable instrument, though the actual size of this minimum increment varies considerably depending on the specific instrument and its particular pricing conventions.
2. How tick relates to pip specifically in forex
For most major forex pairs, a single pip often corresponds closely to the standard tick size, though some platforms display pricing with an additional decimal place (sometimes called a "pipette" or fractional pip), meaning the smallest tick movement might technically be smaller than a full pip in these more granular pricing displays.
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3. Tick size on indices and other instrument types
For index CFDs, including the JSE Top 40 and other indices, a tick typically corresponds to a single index point movement, while for gold, a tick might represent a specific small dollar increment per ounce. Each instrument category has its own specific, defined tick size based on its particular market conventions.
4. Why tick size varies meaningfully by instrument
Tick size reflects each specific market's own historical conventions and practical considerations regarding meaningful price granularity for that particular instrument. A highly precise tick size makes sense for an instrument with very tight, granular pricing, while a coarser tick size might be more practical for instruments where finer granularity wouldn't provide meaningfully useful additional precision.
| Item | Detail |
|---|---|
| Regulator | FSCA, fsca.co.za |
| Exchange control | SARB, resbank.co.za |
| Tax authority | SARS, sars.gov.za |
| JSE hours | 09:00-17:00 SAST Mon-Fri |
| Best forex session | 15:00-17:00 SAST |
| CGT annual exclusion | R50,000 (individuals) |
5. Tick data and its relevance to detailed charting
Some advanced charting tools offer tick-by-tick charts showing every single minimum price movement rather than the more commonly used time-based candlestick charts. This very granular view is sometimes used by scalpers specifically interested in this finest level of price movement detail.
6. Practical relevance for your everyday trading
For most retail traders following swing or position trading styles, understanding tick size primarily matters for correctly interpreting platform-specific pricing precision, rather than requiring deep, specialised tick-level analysis. Broader pip-based concepts remain the more commonly relevant terminology for most everyday trading discussion and calculation.
South African traders using CFD and forex instruments should build clear awareness of the full cost structure of each trade before committing capital. The visible entry cost, the spread, is often the smallest component for positions held overnight or over multiple days. Overnight financing charges accumulate on the full notional value of the leveraged position, not just the margin deposited, which means positions held for a week can accumulate financing costs that exceed the entry spread many times over. Building these costs explicitly into position sizing and holding period decisions is a discipline that improves long-term trading economics significantly.
A tick is the minimum price increment for a specific instrument.
A pip is the standardised fourth decimal measure used in forex. A tick is the minimum allowable price move for a specific instrument, more commonly referenced in futures, indices, and some CFDs.
★ Why It Matters
Worth checking per instrument: confirm whether your platform displays tick size or pip size by default for a given market, since the terms get used inconsistently across different instrument classes and this can cause confusion when reading unfamiliar platform documentation.
✕ Common mistakes
- Not checking your specific platform's terminology for a given market. Confirming definitions avoids confusion when reading unfamiliar documentation.
- Treating tick value as identical across forex, indices, and commodities. Defined tick values vary by instrument.
- Confusing tick-based pricing concepts when switching between instrument types. Each asset class can have its own specific conventions.
Key Takeaways
- A tick is the smallest possible price movement for a given instrument, sometimes used interchangeably with pip but technically a distinct, related concept.
- A tick is the smallest possible price movement for a given instrument, sometimes used interchangeably with the pip.
- Technically it's a more general concept that can differ in size across forex, indices, and commodities.
- The general tick concept explained across instrument types.
- How tick relates to pip specifically in forex.
See also: What Is Scalping and How Is It Different From Day Trading?.
Frequently asked follow-up questions
Is tick size the same across all forex brokers?
Generally yes for standard pip-based pricing, though specific platform display precision (whole pips versus fractional pipettes) can vary by broker.
Indirectly, through its connection to pip value, though most traders work with the more commonly used pip-based calculations rather than tick size directly.
Can tick size change for an instrument over time?
This is uncommon but theoretically possible if an exchange or platform changes its pricing conventions. Checking current platform documentation confirms current tick size for any specific instrument.
