Teenie

What Is a Teenie?

A teenie, in trading, is a measure of value addressing one-sixteenth of one basis point. A basis point is one-hundredths of a percent.

How a Teenie Works

A teenie was once the littlest amount by which a security's price could move and the littlest unit of a security that could be traded. In April 2001, the Securities and Exchange Commission requested all U.S. stock markets to switch from involving divisions in price statements to the decimal system, a system called decimalization. Under this new system, a teenie is addressed by .0625.

With decimalization, a teenie is presently not the littlest amount by which a security's price can move or the littlest unit of a security that can be traded. The new least is .01 pennies. On account of this change, a few traders presently mean 1 penny when they utilize the term "teenie." Some traders (i.e., hawkers) use teenies in their strategies, yet with decimalization, such strategies can be more hard to profit from in light of the fact that spreads are commonly more modest than .0625 pennies.

Historical Pricing and the Teenie

The practice of pricing in eighths extends back many years, when Spanish traders utilized gold doubloons to work with trade, which could be partitioned into two, four, or even eight pieces, and were countable manually. Spanish traders concluded that one's thumbs wouldn't be incorporated for counting, so Spanish gold doubloons had a base of eight. So when the New York Stock Exchange (NYSE) was laid out around 200 years after the fact, it was based on this Spanish trading system: Trade started with this base-eight denomination, and 1/8 of a dollar, or 12.5 pennies, turned into the spread, or the littlest amount a stock could change in value.

In 1997, U.S. markets moved from the prior practice of providing cost estimates in eighths of a dollar to citing in sixteenths of a dollar. This event set off the unavoidable adoption of citing in dollars and pennies, which happened in 2001.

Features

• A teenie is one-sixteenth of a basis point, where a basis point addresses 100th 100th of a percent.
• Prior to decimalization, a teenie was the littlest amount by which a security's price could move.
• Decimalization moved trading standards to base ten as opposed to base eight.