Tick value and tick size

Beginner Questions
1

Hello (this post is directed at ‘rhodytrader’ but anyone else that may have the answer is OBVIOUSLY welcome to respond).

John:

According to this website:

ES Futures Market Profile - Profile of the S&P 500 Futures Market

(AND according to the CME’s website) the TICK SIZE of the S&P 500 futures market is 0.25.

Contract Specifications
The full contract specifications for the ES futures market are as follows :

[ul]
[li]Symbol (IB / Sierra Chart Format) : ES[/li]> [li]Expiration date (as of May 2007) : June 15 2007[/li]> [li]Exchange : GLOBEX[/li]> [li]Currency : US Dollar[/li]> [li]Multiplier / Contract value : $50[/li]> [li]Tick size / Minimum price change : 0.25[/li]> [li]Tick value / Minimum price value : $12.50[/li]> [/ul]
HOWEVER:

I’ve looked at charts from many different brokers and what I see is this:

The price of the S&P 500 futures can move in increments on 0.01 at the brokers i.e. it does not necessarily move in increments of 0.25 (at the moment i.e. today, this morning, at my broker, the price is moving in increments of 0.13 sometimes but most times it moves in increments of 0.26).

So here is the question:

If you have a trading system that would have you place an order ONE TICK above the high or ONE TICK below the low of a bar (for example) does this mean that you should be placing the order at 0.01 above the high or 0.01 below the low of the bar OR at 0.25 above the high or at 0.25 below the low of the bar???

For example:

Let’s assume that the high of your signal bar is at 1108.20 (S&P 500 futures). If one were required to place an order ONE TICK above the high of the signal bar: should it be placed at 1108.21 (1108.20 + 0.01) OR 1108.45 (1108.20 + 0.25)???

Furthermore:

If the same (type of) trading system were being applied to the SPOT forex market then would ONE TICK equal ONE PIP (in your opinion) i.e. one would place an order 1 PIP above your signal bar???

The same with Gold. Is ONE TICK in Gold 0.01 or something else (given that the price movements in Gold, again according to my brokers ‘price activity’ screen, is not in ANY fixed increment i.e. it could be 0.01, 0.13, 1.28, 0.14, etc. etc. etc.).

It’s not so much the TICK VALUE that I’m concerned with here but rather the TICK SIZE.

Regards,

Dale.

Edit:

I’ve attached three ‘Price Activity’ windows (S&P 500, Dow, EUR/USD) for you to look at. What is (in your opinion) the TICK SIZE for each instrument)???




2

Dale,

A tick in ES futures is definitely 0.25. If the quotes you’re looking at use 0.01 my first reaction is that you may be seeing the “spot” index rather than the futures price. If you’re seeing moves of 0.13 then I think you might be seeing fractional ticks (0.125 being half a tick).

So in your example I would consider the reference price to be 1108.25 (nearest full tick level), and the order level 1108.50.

As for EUR/USD, for me a tick is a full pip, not a pipette.

John

3

Thanks John,

It makes sense (and you’re right about the fractional pip pricing i.e. Delta uses fractional pip pricing. I had no idea that it would have an effect on CFD’s though e.g. CFD’s on the indices).

Regards,

Dale.