In plain English
What Tick size means
Tick size is expressed in price units, not money. For example, if an index CFD has a tick size of 0.5, valid prices may be 5,000.0, 5,000.5, and 5,001.0. The dollar value of that 0.5-point move depends on the contract size. A product’s tick size may differ from its displayed decimal precision, and a provider can set different rules for different instruments or trading conditions.
Why it matters
Tick size affects the granularity of entries, exits, spreads, and stop levels. It also determines how a quoted movement should be counted: a 2-point move is four ticks when the tick size is 0.5, but eight ticks when it is 0.25. Using the wrong tick size produces incorrect risk and profit-and-loss calculations.
Example
Assume a CFD has a tick size of 0.25 index points and a contract size of $8 per index point. One tick is worth 0.25 × $8 = $2 per contract. If a client holds 5 contracts and the quoted price moves 1.00 point, that is four ticks and the simplified gain or loss is 5 × 4 × $2 = $40.
Quick answers
Common questions
How do I calculate the number of ticks in a price move?+
Divide the absolute price movement by the tick size. For example, a 1.50-point movement with a 0.25-point tick size equals six ticks.
Can tick size change between CFD instruments?+
Yes. Tick size is instrument-specific and can also differ between related products. The applicable product specification and the platform’s order ticket should show the relevant minimum increment.
Sources