Tickling With Ticks

Hey, the boss wanted the new tick system.

Smaller ticks is assumed to generate more liquidity.

More liquidity means more business.

And more business means Bursa more profits.

And the more profit Bursa have, who does it benefit?

Hmmmm....... how?

So how do you like the new ticks?

In case you are not up-to-date with the latest, Bursa has changed all stock trading bid systems. Stocks priced from 1.00 to 9.99 will see bid price change in multiples of 1 sen and stocks trading above 10.00 will see bid price change in multiple of 2 sen.

The so-called idea with this new tick changes is that it should increase the trading volume.

Sounds great, eh?

However, what about the other side of the fence? What about the traders? What about the punters?

Do you think they like it at all?

Smaller ticks or smaller price bid movement means the stock has to move up by more ticks for the trader to make money. And for them day traders, this could prove to be a big handicap.

And needless to say, the day traders would be asking 'Why bother trading in this market when everything is handicapped against them?'.

Imagine buying a stock trading above .... say 5.00. How many bids is required for the day trader to make money?

How?

Do you really like it when the Bursa thinks like a money-minded businessman?