Ginzy Trading

Let’s talk ticks. Not the kind that hide in the woods and transport Lyme disease, but the kind that indicate price changes on security exchanges.

For any stock with a value higher than one dollar, its minimum tick size is one cent. This means that a stock price can only go up or down in increments of one cent or higher. In other words, a share of Microsoft stock can increase from, say, $122.51 to $122.52, but it can’t increase from $122.51 to $122.516725.

This is significant, because when brokers execute large orders, they’re supposed to do the whole order at once. That way everyone involved in the order is buying and selling at the same price, which seems only fair. But sometimes, the brokers will "play the ticks," by buying or selling part of an order at one price and another part at a different price.

Why would they do such a thing? Because it allows them to give different prices to different clients on the same order, which could make them a nice little profit if they do it right. This unethical (but not always 100% illegal—it depends on the exchange) practice is known as “ginzy trading,” and the brokers involved are basically breaking up one big order into smaller mini-orders so they can capitalize on a security’s upticks and downticks.