Tick size is the exchange-mandated minimum price increment by which a financial instrument can move. It is not set by your broker — exchanges define it, and every price you see, enter, or exit must fall on a valid tick boundary. Understanding tick size is foundational to accurate trade logging, stop placement, and P&L calculation across all asset classes.
Key Takeaways
- Tick size varies by instrument and asset class: EUR/USD trades in 0.0001 increments (pips), the E-mini S&P 500 in 0.25-point increments worth $12.50 each, and US equities in $0.01 increments per SEC Rule 612.
- Tick size and tick value are two distinct concepts — tick size is the price increment, tick value is the dollar amount that increment represents per contract.
- Logging a price at an invalid tick in your trading journal creates irreconcilable P&L discrepancies that compound silently across hundreds of trades.
How Tick Size Works
Tick size is set at the exchange level for each instrument. Every valid price is a multiple of the tick size from a reference point. Prices between ticks simply do not exist — a fill cannot occur there.
Forex: The de facto tick is the pip — 0.0001 for most major pairs (EUR/USD, GBP/USD, USD/CHF) and 0.01 for JPY pairs (USD/JPY, EUR/JPY). Most retail brokers quote to five decimal places, adding a sub-pip unit called a pipette (0.00001). EUR/USD can therefore move in 0.00001 increments at the broker level, but the tradeable pip remains 0.0001.
Futures: Futures tick sizes carry two components — a price increment and a dollar value per contract. CME specifications:
E-mini S&P 500 (ES): 0.25 index points = $12.50 / contract
Micro E-mini S&P 500 (MES): 0.25 index points = $1.25 / contract
Crude Oil (CL): $0.01 / barrel = $10.00 / contract (1,000 barrels)
Gold (GC): $0.10 / troy oz = $10.00 / contract (100 oz)
US Equities: SEC Rule 612 (the Sub-Penny Rule, enacted 2005) mandates a minimum $0.01 tick for National Market System (NMS) stocks priced at or above $1.00. Stocks below $1.00 may trade in $0.0001 increments.
Practical Example
A trader shorts the E-mini S&P 500 (ES) and believes their fill was at 4,512.30. That price does not exist. ES ticks are 0.25 apart, so valid prices around that level are 4,512.00, 4,512.25, 4,512.50, and 4,512.75. The actual fill was 4,512.25.
When the trader logs 4,512.30 in their journal, the recorded entry is off by 0.05 points — $0.625 per contract. That error appears trivial, but:
Per-trade error: 0.05 pts × $50/point = $0.625 per contract
Over 100 trades: $0.625 × 100 = $62.50 per contract
At 5 contracts/trade: $62.50 × 5 = $312.50 phantom gain
The journal now shows $312.50 in profit that was never earned. Metrics like average win and expectancy are skewed. Tick-aware logging catches this at the point of entry.
Tick size is the smallest price move an instrument can make, determined by the exchange. In forex it equals one pip. In E-mini S&P 500 futures, each tick is 0.25 index points and worth twelve dollars and fifty cents per contract. Logging prices at invalid ticks corrupts your trade journal analytics.
Common Mistakes
- Confusing pip and tick. Pip is the forex term; tick is the futures and equities term. They describe the same concept but carry different dollar values depending on the instrument and contract size.
- Ignoring tick value when sizing positions. A 10-tick stop on the ES costs $125 per contract. The same arithmetic applied to EUR/USD requires knowing pip value per lot — skipping this step leads to inconsistent risk sizing.
- Logging invalid prices in your journal. Most trading platforms display fills rounded to valid ticks, but manually entered trades often contain errors. A price between ticks is a sign of a data entry mistake, not a valid fill.
- Setting stops tighter than one tick. The minimum stop-loss on the ES is 0.25 points. Platforms may accept the order but will round it to the nearest valid tick, changing your actual risk by up to one full tick ($12.50 per contract).
How PipJournal Tracks Tick Size
PipJournal validates trade entries against known tick boundaries for each instrument, flagging prices that fall between valid ticks before they corrupt your analytics. For forex traders, pip and pipette values are calculated automatically based on the pair and lot size, so your ATR-based stop distances and risk-per-trade figures always reflect real, executable prices rather than theoretical ones.
