Zero Minus Tick

A zero minus tick is when a security is traded at a price that was the same as the previous trade price, and the trade before that second-to-last trade was higher than these last two.

Okay, a number example to anchor the madness: say a stock traded for $13, then $11, and $11 again. Bam. There’s a zero minus tick. See how the last two trades were twinsies ($11 and $11), and the one before was higher (the $13)? That means the stock took a dip, and then plateaued there, at least for now. Zero. Minus. Tick.

Who cares about zero minus ticks, anyway? Well, just about everyone, their mom, and the SEC. The SEC said, ‘no shorting stocks on a zero minus tick (a.k.a. “a downtick”)’ until 2007. This rule was implemented shortly after the stock market crash of 1929, since shorting on downticks is partially what led to the stock market collapse. Yeah, real bad. Investors of the sneaky variety were shorting stocks when they shouldn’t have been, just to make certain shareholders nervous about being shareholders, even though it was fine. The investors then cashed out when the shareholders sold out of false nervousness.

So...yeah, that was a rule 'til 2007. 2008? Another recession. Yikes. So the zero minus tick rule is back in place now, though it’s a bit different than before. It helps to make sure that short sales don’t artificially drive down prices, tricking the rest of us normal folk.