Trading Math
A pip and a point are two sizes, and a tick is an event. This paper shows you the three words on one real price, ticks as the moments the price changes, where the pip and the point sit on gold and on an index, and the window on your platform that gives all its numbers in points.
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Three words get used for the small steps of a price, and two of them are sizes while the third is not. The pip is the fourth decimal place of a five-digit price like 1.15872: 0.0001, the step traders count in, worth ten dollars per lot on the euro against the dollar. The point is the last digit, 0.00001, a tenth of a pip — the finer grain a five-digit platform adds. The tick is one change of the price, from 1.15872 to 1.15874 or to anything else, of whatever size. A pip and a point are how far; a tick is that it moved.
Because a tick is an event and not a size, ticks make a stepped line rather than a ruler. Each step up or down is one tick, and the steps are of different heights — one point, two, four — and arrive at irregular times, hundreds in a busy minute and a handful in a quiet one. Nine ticks took the price from 1.15872 to 1.15879, seven points, less than a pip. A tick chart draws every one of those steps; a one-minute bar draws only where they started and finished.
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