Points and ticks are a way of describing an amount of price movement of a market (e.g. the XYZ market has moved downwards by two hundred points), which is something that traders do often, but many traders do not know what the difference is between points and ticks, or which one to use for a particular market.
Points
A point is the amount of price movement that occurs when the number before the decimal point changes by one (e.g. from 12.34 to 13.34). Points are usually used to describe the price movement of stock indicies (e.g. the Nasdaq 100, the FTSE 100, etc.) and sometimes individual stocks, because stock indicies and individual stocks often move many or several points (respectively) within one day (e.g. the Nasdaq 100 might move from 2,000 to 2,200, which would be two hundred points).
Ticks
A tick is the amount of price movement that occurs when the number after the decimal point changes by one (e.g. from 12.34 to 12.35). Ticks are usually used to descibe the price movement of currency markets (i.e. forex markets) because currency markets usually move many ticks within one day, but do not move any points within one day (e.g. the Euro to US Dollar currency market might move from 1.2500 to 1.2700, which would be two hundred ticks, but no points).
Points or Ticks?
In theory, either points or ticks can be used to describe the price movement of a market (i.e. points and ticks are fungible), but usually one or the other is used depending upon the market being discussed (as described above). Sometimes, incorrectly using points or ticks does not cause any problems (e.g. if a trader says that the British Pound to US Dollar currency market moved two hundred points, they are obviously referring to ticks), but some markets have point values and tick values that are close to each other (e.g. a point value of 1.0, and a tick value of 0.1), in which case incorrectly using points or ticks can cause problems, so it is important to learn about, and use, points and ticks correctly.
