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What is a Tick Indicator?

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  • Written By: Mary McMahon
  • Edited By: O. Wallace
  • Last Modified Date: 05 November 2016
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A tick indicator is a number which provides information about the movement of stocks in a given index. The tick indicator is determined by adding upward trends together and subtracting downward trends. In an index of 100 stocks, for example, if 30 stocks moved up and 40 moved down, the tick indicator would be -10. Tick indicators are given throughout the day, usually at set time intervals to provide an understandable frame of reference.

The tick indicator is not the same thing as a tick, although the two terms are related. A tick is the smallest functional fluctuation experienced by an individual stock. The size of a “tick” varies depending on the market being monitored. The tick indicator refers to overall trends of movement within an index, and is a very broad piece of information.

Tick indicators do not tell people which stocks are moving, or even which area of the market is most active. They only inform people about the general direction of the market as a whole within a given time frame. When the market is volatile, tick indicators may skew wildly, and sometimes it can be difficult to extract any meaningful data from the shifts in value. When the market is more stable, tick indicators can betray financial trends for people who are familiar with the movements of the market. Each market is slightly different, and requires a different approach from investors.

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Many financial websites publish tick indicators along with values for major stocks of interest, and they are also published on stock market tickers which provide real time information about the movement of financial markets. Using this information, people can sometimes spot a market trend and move quickly to take advantage of it, which may involve making a variety of decisions about which stocks to trade and when to extract the maximum value from the market.

People generally do not rely on the tick indicator alone, because it can conceal interesting information. For example, if the tick indicator is +300, this doesn't inform people about which stocks are trading more rapidly and driving the number up; people must look elsewhere for this information to see if there are stocks which they should be taking advantage of. Likewise, a tick indicator of -200 doesn't tell observers if there is a trend in a specific area of the market, such as tech stocks, which might skew the numbers.

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