What is a Zero Minus Tick?


Also called a zero downtick, a zero minus tick is a trade that occurs at the same price as the trade preceding it but lower than the last trade at a different price. A zero minus tick is the opposite of a zero plus tick.


How Does a Zero Minus Tick Work?


Let's say the first trade of the day for Company XYZ stock is 1,000 shares at $20 per share. The next trade is 2,500 shares at $18. The third trade is 1,500 shares at $18 (the same price). The third trade is called a zero minus tick because that $18 trade is the same price as the previous trade but lower than the last trade that occurred at a different price (the $20 trade).


Although the term is usually used in reference to stocks, it can also apply to bonds, commodities and other traded securities.


Why Does a Zero Minus Tick Matter?


A zero minus tick suggests that a stock is trending down and staying there. The SEC used to disallow shorting stocks on downticks or zero minus ticks in order to prevent traders from jumping on the bandwagon to destabilize a stock's price.

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