Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Minus Tick

What it is:

Also known as a downtick, a minus tick occurs when a security sells at a price less than the preceding sale. A minus tick is the opposite of an uptick.

How it works (Example):

For example, if there is a trade for XYZ Company at $15 per share, and the next trade is at $12 per share, the XYZ shares are said to be "on a minus tick."

Although the term is usually used in reference to stocks, it can also apply to bonds, commodities and other traded securities.

Why it Matters:

Minus ticks are important because not only do they indicate the price trend of a stock, they also trigger restrictions on short sales. In the United States, when a stock is on a minus tick, traders are generally prohibited from shorting the stock. This rule (called the short sale rule or the tick test) exists to prevent traders from jumping on the bandwagon to destabilize a stock's price (note that exchange-traded funds can be shorted on a minus tick, however).