What exactly is a tick?
Hi, a total forex trading noob here. I have been learning forex trading for a few weeks now and I noticed one thing is never clearly explained anywhere clearly: what a tick exactly is.
From what I understand:
A tick is a change in security price as trades take place
Ticks are grouped together in a timeframe to form a ohlc bar commonly seen in charts
However, I always see ask/bid price in a tick and here is my confusion: aren't asks/bids not complete transactions? Price only changes if a transaction is completed when a buyer purchases securities at an ask price or seller sells the securities at a bid price. If this is the case, how do we form ohlc data using ticks?
Are ask/bid price in a tick actually a completed ask/bid and they are there to let you know that a transaction was through a bid or ask?
If someone could clarify on this, I would really appreciate it. Thanks!
You're talking about two things at once here. Ticks and Tick Data. Those aren't the same thing.
A tick is just the minimum price movement of a trading instrument, but for the most part it's not really a term used with FX. It's mostly used for things like Futures where say a contract moves from 100.25 to 100.50, being a one-tick movement if the minimum tick size is 0.25.
Tick Data is the recorded historical log of prices, usually provided as a CSV or TXT