Forums › ACCA Forums › ACCA AFM Advanced Financial Management Forums › tick size
- This topic has 4 replies, 4 voices, and was last updated 6 years ago by John Moffat.
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- November 17, 2014 at 11:41 am #210669
Can pls someone tell me how do u find tick size like in question Ntc 6/02 question bpp 52 how did tick size 3.125 calculated. Thanks
November 17, 2014 at 1:27 pm #210702You never need to use ticks in the exam!
However, 1 tick is the smallest movement in the future, so for exchange rates it is 0.0001.
The value of 1 tick is the amount of profit/loss of a 1 tick movement on 1 contract.
Since the contract size is 31250, the value of a 0.0001 movement is 0.0001 x 31250 = 3.125.
Why on earth do you not watch the free lecture as I suggested before?
April 10, 2015 at 10:40 pm #240834I got a bit confused – the course notes (page 96) state that the tick size is 0.0001 however the technical article (https://www.accaglobal.com/uk/en/student/acca-qual-student-journey/qual-resource/acca-qualification/p4/technical-articles/exchange-derivatives.html) states that the tick is 0.00001.
Is my understanding right – it just depends on how exactly is the exchange rate given; if 4 decimal spaces then tick is 0.0001, if 5 decimal spaces then tick is 0.00001; it just depends and it is not one absolute value?
Thank you very much for wonderful lectures!
December 5, 2017 at 10:40 pm #420823Hi. Your response to this question, particularly the part where you say “You never need to use ticks in the exam”, is it STILL applicable for a 2017 exam seeing as how this was talked about back in 2014.
December 6, 2017 at 8:17 am #420883lunix: The tick size does depend on the number of decimal places – it is always the smallest possible movement in the futures price. However in practice (and in exam questions) exchange rates are quoted to 4 decimal places and the tick size is always therefore 0.0001.
damariskitti: Yes – what I wrote still applies! Although you should know what ticks are, you never actually need to use them. It is up to you whether you use them or not – whichever you find easier.
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