Tick Size

Tick size is the smallest permissible price increment by which a futures or options contract can move up or down during trading. It is defined by the exchange for each contract and represents the minimum price fluctuation. For example, if the tick size for a gold futures contract on MCX is ₹1, the price can only change in multiples of ₹1 per unit. Multiplying the tick size by the contract's lot size gives the tick value—the rupee gain or loss on a single position for every minimum price move. Tick size is an important parameter for traders calculating potential risk and reward on commodity futures positions, as it directly determines the granularity of price movement and the cost of trading narrow-spread instruments.