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What is a Plus Tick?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 20 October 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Sometimes known simply as an uptick, a plus tick is a type of transaction in the marketplace where the most recently announced price for a given security is higher than the previously named price. The term is sometimes applied to actual purchases and sales, but may also be applied to situations involved stock quotes. Even a small increase in the price of a security is sufficient to qualify as a plus tick.

Closely associated with the plus tick is a pricing phenomenon known as a zero plus tick. In this type of pricing succession, there is no change between the new price associated with a quote and the previously quoted price. This would mean that if a given security has traded previously at $5 US dollars (USD), then $5.25 USD, and is now quoted to trade at $5.25 USD again, the latest transaction is priced at the same rate as the previous transaction, but still higher than the last different trade. By contrast, a plus tick would follow a pattern that indicated some type of increase over previous trades, such as a security that went from $5 USD to $5.25 USD and then advanced to $5.50 USD.

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There are a few general rules that apply for trades or quotes featuring a plus tick. One is that short sale orders must be executed using this type of pricing. The one exception is that short orders may also be executed for the same price as a previous execution, or as a zero plus tick. For many years, governmental agencies often specifically prohibited what is known as a downtick for short orders. That is, the quoted price could not be lower than the price associated with the most recent transaction involving that same security. In recent years, many agencies have removed this prohibition since most of the world’s investment marketplaces generally make the use of a downtick in this type of trade unworkable.

Investors will usually consider the type of securities that are involved with the plus tick approach to pricing very closely. Assuming there is evidence that the security has the potential to continue increasing in price, even incrementally, acquiring that security is often a good decision. If there are factors indicating that the price of the security is likely to stall for a time, investors may be less interested in making a purchase immediately. One exception would be if an investor had reason to believe the investment would experience a significant upswing once market conditions that were holding down the price were resolved.

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