The price in the foreign exchange market is constantly changing, the rate is formed automatically based on supply and demand for a particular currency.
Forex ticks – the minimum price change that is displayed on the chart of a currency pair or a quote table.
There is a certain time interval between quotes entering the trading terminal, so the price change may not occur smoothly, but in jumps.
How does a forex tick differ from a pip in a currency pair quote
Ideally, 1 forex tick should be equal to one point, but in practice, you yourself can observe how the price jumps over two or even three points at once. With a wider gap between quotes, a gap (price gap) is formed, which causes a lot of trouble for traders with open positions.
If we consider a tick in relation to the quote of a currency pair, then this is a change in the last decimal place, in a four-digit quote – the fourth, in a five-digit quote – the fifth. It is clear that in the first case, the rate of price change will be ten times slower than in the second one, the five-digit quote displays smaller fluctuations in the rate, which means that the tick value when it is applied will be smaller.
There is also a concept – a tick chart, in fact, it displays the shortest time frame available; special indicators are usually used to display tick charts in the trader’s terminal .
A variant of such a chart can be seen by metatrader when opening a new order:
It does not carry special functionality, on it you can only see how dynamically the price of the asset you have chosen is changing. If you want to analyze forex ticks, then the QUIK trading platform is more suitable for these purposes. True, this is probably the only advantage of this trading platform.
How important are forex ticks in trading?
With medium-term and long-term trading, this aspect is absolutely not important, at the same time, there are whole strategies on ticks designed for short-term trading.
They are quite complex and require certain experience in stock trading, so they are rarely used in real life.
Forex ticks are interpreted differently by different brokers due to some technical conditions for dealing, but in general it all boils down to the fact that this is the smallest recorded price change between two adjacent quotes.