What is Tick Size? Minimum Price Movement in Indian Markets
Tick size is the minimum price increment by which a stock's price can move on the exchange. In India, the standard tick size for most equity stocks on NSE and BSE is Rs.0.05, which means the price can only change in multiples of 5 paise.
If TCS is trading at Rs.3,800.00, the next possible price is Rs.3,800.05 or Rs.3,799.95. It cannot trade at Rs.3,800.03 or Rs.3,800.01 because those are not valid increments within the Rs.0.05 tick structure. The tick size creates a structured grid on which all trading happens.
Why does tick size exist?
Tick size standardises price changes across the market. Without it, traders could place orders at infinitely small price differences, clogging the order book and making it difficult to match orders efficiently. The tick size ensures that each price level is meaningful and that the order book is manageable for the exchange's matching system.
What is the tick size for different instruments in India?
| Instrument | Tick Size |
|---|---|
| Equity stocks (NSE/BSE) | Rs.0.05 (5 paise) |
| Index futures (NIFTY, BankNIFTY) | Rs.0.05 |
| Stock futures | Rs.0.05 |
| Index options | Rs.0.05 |
| Stock options | Rs.0.05 |
| Currency futures | Rs.0.0025 |
| Commodity futures | Varies by commodity |
How does tick size affect trading?
For most retail investors buying delivery shares, tick size has minimal practical impact. Whether you buy at Rs.500.00 or Rs.500.05 makes very little difference on a long-term investment.
For intraday and F&O traders, tick size matters more because profits and losses are calculated per tick. In NIFTY options, each tick of Rs.0.05 on one lot represents a gain or loss. Scalpers who try to profit from very small moves work in tick increments.
Investments in securities market are subject to market risks. This article is for educational purposes only.
Frequently Asked Questions
Why can I not place an order at Rs.500.03?
Because the tick size on NSE and BSE for equity stocks is Rs.0.05. Orders can only be placed at prices in multiples of Rs.0.05. Valid prices are Rs.500.00, Rs.500.05, Rs.500.10, and so on. If you enter an invalid price, the exchange rejects the order.
Is tick size the same on all exchanges globally?
No. Different exchanges and instruments have different tick sizes. Some US exchanges use 1 cent (Rs.0.01 equivalent) as the tick size. In India, the standard is Rs.0.05 for equity, which is wider than many developed markets. Tick size rules are set by each exchange in consultation with the regulator.
Does tick size change for high-priced stocks?
No. In India, the tick size is the same regardless of the stock's price. A stock trading at Rs.50 has the same Rs.0.05 tick as one trading at Rs.50,000. This means the tick represents a different percentage of the price for different stocks, which is something high-frequency traders take into account.
How many ticks of profit do intraday traders typically target?
This varies widely depending on the trader's strategy, the instrument being traded, and market conditions. Some scalpers target 5 to 10 ticks per trade on NIFTY options, while swing traders might target hundreds of ticks on stock positions. There is no universal standard and this depends entirely on individual strategy and risk management.
Has the tick size in India ever been changed?
SEBI has revised tick sizes in the past. Earlier, the tick size was Rs.0.10, which was later reduced to Rs.0.05 to improve price discovery and tighten bid-ask spreads. Any future changes would be announced by SEBI and implemented by exchanges with advance notice.
Investments in securities market are subject to market risks. This article is for educational purposes only and does not constitute investment advice.
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