How Does the Tick Size Influence Trading Strategy? ▴ Learn

How Does the Tick Size Influence Trading Strategy?

The tick size, or minimum price fluctuation, affects the profitability of high-frequency trading strategies. A smaller tick size allows for tighter bid-ask spreads and makes it easier for traders to scalp small profits.

A larger tick size can discourage high-frequency traders and may lead to wider spreads. Exchanges select a tick size to balance liquidity and market efficiency.

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