Lesson 1 of 7 · 2 min

How a tick moves

The exact mechanics behind a one-tick change in price — and why aggression and absorption matter.

The order book is the list of resting orders waiting to be filled. A tick is the smallest move price can make. Here's what has to happen for one to occur.

Definition

Bids are resting orders to buy, below the current price. Offers (asks) are resting orders to sell, above it.
The highest bid and lowest offer form the inside market. The gap between them is the spread — usually one tick on liquid index futures like ES.

Bids below, offers above, and the spread between them. (Illustration.)

The mechanism

Price ticks up when aggressive buyers send market orders that consume every contract offered at the best ask. The next price up becomes the new best offer.

Price ticks down when aggressive sellers consume every contract bid at the best bid.

So a tick is the result of aggression exhausting a level. That leads to two ideas you'll see across this library:

Aggression — a burst of market orders in one direction.
Absorption — heavy aggression that doesn't move price, because passive orders keep refilling the other side.

Key Insight

Aggression with movement means the other side was thin. Aggression without movement means someone was absorbing it — and that is often the more interesting observation.

Price can also move without trades

If the resting orders at the best bid are cancelled, the best bid drops a tick without a single trade. Quote changes and trades are different events, and they show up differently on different tools.

Trading implication

When you see price move, ask which happened: did aggressive orders take out a level, or did liquidity simply step away? The footprint and tape show the first; the DOM and heatmap show the second.

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The mechanism

Price ticks up when aggressive buyers send market orders that consume every contract offered at the best ask. The next price up becomes the new best offer.

Price ticks down when aggressive sellers consume every contract bid at the best bid.

So a tick is the result of aggression exhausting a level. That leads to two ideas you'll see across this library:

Aggression — a burst of market orders in one direction.

Absorption — heavy aggression that doesn't move price, because passive orders keep refilling the other side.

Key Insight

Aggression with movement means the other side was thin. Aggression without movement means someone was absorbing it — and that is often the more interesting observation.

Price can also move without trades

Trading implication

When you see price move, ask which happened: did aggressive orders take out a level, or did liquidity simply step away? The footprint and tape show the first; the DOM and heatmap show the second.