A downtick can be defined as a transaction for a financial security that happens at a lower price than the last transaction.
A downtick happens when a security's price falls in comparison to the previous trade.
A downtick happens when a transaction price is trailed by a diminished transaction price.
This is generally put to use in reference to securities, but it can also be extended to commodities and other forms of investments.
A tick can be defined as a measure of the minimum ascending or descending movement of the price of a stock, and since the year 2001 the base tick size for securities trading above $1 is 1 cent.
For example, if security XYZ traded at $12, and the following trade happens at a price beneath $12, XYZ will be considered on a downtick.
This can be contrasted to an uptick, which alludes to an exchange in which the security price increases.
For example, if security XYZ traded at $12, and the following trade happens at a price above $12, XYZ will be considered on an uptick.
A downtick is a common part of market changes, and can have various causes, that include an expansion in supply over demand for a given security.
A downtick doesn't necessarily signal a downturn.