A scanner throws up two breakouts on the same evening. One is a share quoted at ₹3,850, the other at ₹9.40. Your written rule is the same for both: buy 0.2% above the breakout level, place the stop 1% below the entry. You put in two orders before bed. In the morning the expensive one has filled exactly where you intended. The cheap one filled a good deal higher than you meant, and by lunchtime the stop has been taken out on a move you would have described as nothing at all. Nothing malfunctioned. On the second share, neither of the two numbers in your rule was a number the exchange would accept.
Prices on an Indian exchange do not vary continuously. They move in fixed steps — the Tick size — and every order you place, every trade that prints, and therefore every high, low and close on your chart is a whole number of those steps. The indicator that reads 247.6312 is reporting an average of prices, and an average of prices is not itself a price. Nobody can bid it.
A tailor’s tape is marked in quarter-inches. Ask for a sleeve half a quarter-inch shorter and the tailor does not refuse — he simply marks the nearest line, because the tape has no mark between them. On a kurta sleeve the difference is invisible. On a shirt collar it is the whole fit, and the same tape produced both.
The exchange’s tape is marked in ticks, and there is nothing between the marks. A five-paise step is invisible on a share quoted in four figures and decisive on one quoted in single digits. The instrument did not change; the size of the smallest mark relative to what you are measuring did.
What the tick actually is
- It is a specification, not a market fact. The exchange publishes the tick that applies to each security, and it can be revised. Five paise was for many years the single step for almost all Indian equities; the exchanges have since moved to a finer step — one paisa — for lower-priced securities, under a framework that is phased in and reviewed. Which step applies to a particular scrip today is something to look up in the current specification rather than to remember.
- Derivatives carry their own. A futures or options contract states its tick in the contract specification alongside the lot and the expiry, and it need not match the tick on the underlying share.
- It sets a floor under the [[Bid-ask spread]]. The best bid and the best offer cannot be closer together than one tick. That floor is a fixed number of paise, which means it is a variable percentage — and the percentage is what your costs are actually denominated in.
- Most of the candle is built from it. The open, the high and the low are traded prices, so all three sit on tick boundaries, and a day’s range on a low-priced share may consist of six or seven distinct prices in total. The official close is the exception worth knowing: on an Indian exchange it is a weighted average of the last half-hour’s trades rather than the final print, so the number your candle closes at is a computed figure and not necessarily a price at which anybody transacted — the same lesson arriving from the other direction.
Five chart readings the tick quietly manufactures
| What you see | What granularity may be doing | How to tell |
|---|---|---|
| A run of doji and tiny-bodied candles | On a low-priced share, open and close can differ by one tick or none at all on an ordinary day. That is not indecision between buyers and sellers; it is a body that had two or three available values to take. | Divide the candle body by the tick. A body of one or two ticks carries no information about conviction. |
| An unusually neat cluster of inside bars | The narrower the range in ticks, the more likely the next bar sits inside it by arithmetic alone. Compression patterns appear far more often on shares with a coarse relative tick. | Count the day’s range in ticks. A seven-tick range cannot produce a meaningful inside-bar sequence. |
| A breakout “by one tick” | On a share where a tick is 0.53%, one tick past the level is a real move. On a share where a tick is 0.0013%, one tick past the level is indistinguishable from the level. | Express your breakout confirmation in ticks and in ATR, never in rupees, and never in per cent alone. |
| A stop that keeps getting hit “by nothing” | A stop one tick under a support level is one tick under it — which on a coarse-tick share is half a per cent of slack and on a fine-tick share is no slack at all. | Convert the intended stop distance into ticks before placing it. If the answer is under five, the placement is being decided by granularity rather than by you. |
| A [[Limit order]] that never fills at your level | A level derived from a moving average, a Fibonacci retracement or a VWAP is a computed number and almost never lands on a tick. The order has to be rounded, and rounding a buy up or down decides whether it sits in front of the queue or behind it. | Round deliberately and write down which way. For a buy, rounding down is patient and may miss; rounding up is eager and pays a tick. |
Every price level in the book is a whole number of ticks. Watch what happens to the spread as the levels thin out.
What to do about it in five minutes
- 1Find the tick for the scrip, not for the market
The exchange publishes it in the security’s specification. Do this once per name in your watchlist, not once in your life, because the framework is revised.
- 2Compute the resolution
Tick divided by price, as a percentage. Write it next to the name. That single number tells you which of your rules are expressible on this instrument.
- 3Restate every threshold in ticks
Entry buffer, stop distance, breakout confirmation, trailing step. If any of them comes to fewer than about three ticks, the rule is being decided by the grid and not by your analysis.
- 4Set a floor on your instrument’s resolution instead of arguing with it
A liquidity filter is standard practice in this track; a resolution filter belongs beside it. Excluding names on which your usual stop distance works out to fewer than a handful of ticks is one decision made once, rather than a surprise per trade.
- 5Round your computed levels before you place them, on purpose
Take the indicator value, round it to a valid tick yourself, and record which direction you rounded. It removes an unlogged variable from every trade you later try to review.
A share is quoted at ₹9.40 on a five-paise tick. Your written rule enters 0.2% above the breakout level. What can that order actually be?
Meter pe 47 rupaye 60 paise aaye, par auto waale ke paas 5 rupaye se chhota chhutta hai hi nahi — aap 50 dete ho. Lambi sawaari mein yeh 5 rupaye kisi ginti mein nahi aate; nukkad tak ki 12 rupaye waali sawaari mein yahi 5 rupaye poori keemat badal dete hain. Exchange ka bhi chhutta fix hai — 5 paise ka tick. ₹3,850 waale share pe 5 paise matlab 0.0013%, dikhta bhi nahi. ₹9.40 waale share pe wahi 5 paise matlab 0.53%. Ab aapka likha hua rule kehta hai "level se 0.2% upar khareedo" — 9.40 ka 0.2% do paise se bhi kam hai, aur do paise ka bhaav hota hi nahi. Toh order lagega poore ek tick upar, yaani 0.53% pe — jo aapne likha tha uska dhai guna se bhi zyada. App error nahi dega. Rule wahi likha hai, chala kuch aur hai.
- Prices move in fixed steps set by the exchange, so every candle sits on tick boundaries and no computed level is a price.
- The tick is a fixed number of paise, which makes it a wildly variable percentage — the only unit your returns are measured in.
- A one-tick spread crossed twice is the floor on a round trip, and on a low-priced share that floor can exceed one per cent.
- Any threshold in your rule finer than one tick is not a rule; it is rounded or refused, and which of those happens is your platform’s convention rather than your choice.
- Restate entries, stops and breakout buffers in ticks per instrument, and filter out names whose resolution your rule cannot survive.
Mark it done to track your progress through the curriculum.
Common questions
Short, direct answers to what people ask about this topic.
- tick size meaning in share market
- Tick size is the smallest amount by which a share’s price is allowed to move on the exchange — the gap between one quotable price and the next. Every order placed and every trade that prints sits on one of those steps, which is why a level your indicator computes to four decimals is not a price anybody can bid. The exchanges publish the tick that applies to each security in its specification, and the framework is revised from time to time.
- the smallest amount by which a share price can move is called the
- Tick size. It is the fixed step the exchange sets between one valid price and the next, which is why the open, high and low on every candle sit on tick boundaries rather than anywhere in between. Because the tick is a fixed number of paise, the same step is a tiny percentage of an expensive share and a large percentage of a cheap one.
- what is one tick worth as a percentage on a 10 rupee share
- On a five-paise tick a ₹10 share moves in steps of about 0.5%; on a one-paisa tick, about 0.1%. Divide the tick by the price and you have the resolution of that instrument — the finest move it is capable of making. The same five-paise tick on a ₹3,850 share works out at roughly 0.0013%, some four hundred times finer, so one written percentage rule means very different things on the two.
- why was my limit order rejected for an invalid price
- Usually because the price entered was not a whole number of ticks — exchanges accept only prices sitting on the published tick grid, so a computed level like ₹247.63 on a five-paise tick is not something the system will take. Platforms differ in what they do with such a number: some round it to the nearest valid tick, some round a buy up to the next one, and some refuse the order outright. Rounding the level yourself before placing it removes that unlogged variable.
- how much does crossing the bid-ask spread cost on a low priced share
- The best bid and the best offer can never sit closer than one tick, so crossing the spread to get in and again to get out costs at least two ticks. On a ₹9.40 share with a five-paise tick that floor is about 1.06% of the position before any brokerage or statutory charge; on a ₹3,850 share it is around 0.0026%. The floor is a fixed number of paise, so it is a wildly variable percentage — and the percentage is the unit your returns are measured in.