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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
You 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?
I 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!
Hi. 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.
lunix: 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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