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Teenie: What Is It & How It Works
What is a Teenie?
A teenie, in trading, is known as a Measure of value, representing one-sixteenth of one basis point. A basis point is one-hundredths of a percent.
- A teenie is one-sixteenth of a basis point; a basis point represents one-hundredth of a percent.
- Before decimalization, a teenie was the smallest amount by that a security’s price could move.
- Decimalization moves trading standards to base the ten rather than base eight.
How a Teenie Works
A teenie was once the smallest amount by which a security’s price could move. It is the smallest unit of protection that could trade. In April 2001, the Securities and Exchange Commission ordered all United State’s stock markets to switch from using fractions in price repeats to the decimal system. A system is called decimalization. Under this new system, a teenie is represented by .0625.
With decimalization, a teenie is no longer the smallest amount by which a security’s price can move—the smallest unit of protection that can trade. The new minimum is .01 cents. Because of the change, some traders now mean one cent when they use the word “Teenie.”
Some traders, that is, Scalpers, use teenies in their strategies. But with decimalization, such systems can be more challenging to profit because spreads are usually smaller than .0625 cents.
Historical Pricing and the Teenie
The pricing practice in eighths straighten back hundreds of years when the Spanish traders used Gold coins to easy trade. It was divided into two, four, or even eight pieces and was countable by hand. Moreover, Spanish traders decide that they would not include one’s thumbs for counting.
So Spanish Gold coins had a base of eight. So when the New York Stock Exchange establishes about 200 years later. It is on this Spanish trading system: Trade began with this base-eight denomination, and 1/8 of a dollar, or 12.5 cents, became the spread. The smallest amount a stock could change in value.
In 1997, United State’s markets moved from the existing practice of repeating prices in eighths of a dollar to repeating in sixteenths of a dollar. This event activates a situation—the unavoidable adoption of repeating in Dollars and Cents in 2001.
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