A teenie, as used in the world of trading is measurement of value that represents one-sixteenth of 1 basis point. The base point equals one hundredths percent.
How a Teenie Works
Tinyies were once the smallest amount the price of a security could change and was also the lowest amount of a security which could trade. In April of 2001 the Securities and Exchange Commission mandated to all U.S. stock markets to move between using price quotations with fractions and a decimal system that is which is a system known as decimalization. With this new system the teenie fraction is symbolized by .0625. 1
By decimalization, a one-teenie no longer is the most tiny amount in which an investment’s value can fluctuate or the most tiny amount of a security which is able to be traded. The new minimum value is .01 cents. Due to this change, certain traders use the term 1 cent when they employ the word “teenie.” Certain traders (i.e. scalpers) utilize teenies as part of their strategies. However, using decimalization, these strategies are more difficult to earn a profit because spreads tend to be less then .0625 cents. 2
The Teenie and Historical Pricing
Pricing in eights goes through the centuries in the past, back to the time when Spanish traders utilized gold doubloons for trade that could be broken into four, two as well as eight parts and could be counted by hand. Spanish traders made the decision that thumbs could not be counted and, therefore, Spanish gold doubloons were made with the base of eight. Therefore, that when New York Stock Exchange (NYSE) was created in the year 2000 the foundation was the Spanish trading system trading began with this base eight denomination as well as 1/8 dollar which is 12.5 cents, was the spread, which was the smallest amount in which a stock could be changed in value.
Since 1997, U.S. markets moved from pricing prices by eighths of the dollar , to quotes in sixteenths of the dollar. This was the catalyst for the introduction of quotesin cents and dollars that was introduced in 2001.
