Tick Size
Tick size is the minimum amount by which a stock or contract price can change in either direction. Indian exchanges set tick size by instrument: most cash equities tick in five paise, while index futures move in 0.05-point increments. Knowing tick size matters for scalping, F&O strategies, and reading the order book correctly.
Key takeaways:
- Tick size is the smallest allowed price increment for a trading instrument.
- Most NSE/BSE cash equities have a tick of ₹0.05; some illiquid scrips may be ₹0.01.
- Nifty and Bank Nifty futures tick at 0.05 index points.
- Options tend to tick at 0.05 paise on the premium, regardless of the underlying.
- Tick size sets the minimum profit a trade can capture and is critical for scalpers.
Why tick size exists
Without tick limits, prices could quote in fractions of a paisa, making the order book chaotic and giving high-frequency traders an unfair edge. By setting a minimum tick, exchanges standardise quoting, ensure orderly markets, and let every participant compete at the same precision level.
Tick size across instruments
| Instrument | Tick size |
|---|---|
| Most NSE cash equities | ₹0.05 |
| Stocks under ₹15 / illiquid scrips | ₹0.01 (varies) |
| Nifty / Bank Nifty futures | 0.05 index points |
| Stock futures | ₹0.05 |
| Index / stock options | ₹0.05 on the premium |
| USD/INR futures | ₹0.0025 |
| Gold (MCX) | ₹1 per 10 grams |
Tick size for scalpers
Scalpers, who try to capture tiny moves repeatedly, must understand tick size deeply. If Nifty futures tick at 0.05 points and the lot size is 25, one tick is worth ₹1.25 per lot. After paying brokerage, exchange fees, and spreads, a scalper needs the price to move several ticks just to break even. That math is what kills many would-be scalpers.
Tick size and order placement
An order placed at an invalid price (such as ₹100.03 when the tick is ₹0.05) will be rejected by the exchange. Brokers usually round automatically, but it pays to know your instrument’s tick size to avoid surprises, especially in F&O. Some illiquid options have tick sizes that effectively make them un-tradeable for short-term strategies.
Tick size vs lot size
People often confuse the two. Tick size is the minimum price change; lot size is the minimum quantity. Together they determine how much one tick of movement costs you. For Bank Nifty futures (lot 15, tick 0.05), one tick is worth ₹0.75 per lot. Multiply by your number of lots to see the rupee impact.
When the exchange changes tick size
Exchanges sometimes change the tick size of a stock based on its price band — for instance moving from ₹0.05 to ₹0.01 when a stock falls below ₹15. These changes are announced via circulars and applied with a few days’ notice. Algorithmic traders pay close attention because such changes affect spread economics.
Frequently asked questions
Can my limit order be placed at a price between two ticks?
No. The exchange enforces tick-size discipline; non-conforming prices are rejected.
Does tick size affect mutual funds?
No. MFs transact at end-of-day NAV without tick constraints. Tick size only matters for exchange-traded instruments.
Why do some option prices show ₹0.05 ticks even when the stock ticks at ₹0.05?
Premium price levels are tracked separately from the underlying, but exchanges standardise both at 0.05 to keep the system simple.
How does tick size impact bid-ask spreads?
The minimum possible spread is one tick. In a highly liquid stock with one-tick spread, you cannot get a better quote inside the spread.
