What is a Zero Downtick?
Also called a zero, a zero downtick is a trade that occurs at the same price as the trade preceding it but lower than the last trade at a different price. A zero downtick is the opposite of a zero plus .
How Does a Zero Downtick Work?
Let's say the first trade of the day for Company XYZ shares at $18. The third trade is 1,500 shares at $18 (the same price). The third trade is called a zero downtick because that $18 trade is the same price as the previous trade but lower than the last trade that occurred at a different price (the $20 trade).
Although the is usually used in reference to , it can also apply to bonds, commodities and other traded securities.
Why Does a Zero Downtick Matter?
A zero downtick suggests that a stock's price.is trending down and staying there. The SEC used to disallow shorting on downticks in order to prevent traders from jumping on the bandwagon to destabilize a