Reviewed by Aug 27, 2020| Updated on
What Is a Teenie?
A teenie, in trading, is a measure of value representing one-sixteenth of one basis point. A basis point is one-hundredth of a per cent.
How a Teenie Works
A teenie was once the smallest amount that could push the price of a commodity and the smallest unit that could be exchanged in security. In April 2001, the U.S. stock markets were ordered by the Securities and Exchange Commission to move from using percentages in price quotes to the decimal system, a system called decimalisation.
Under this new system, .0625 reflects a teenie. A teenie with decimalisation is no longer the smallest amount by which the price of a security can move or the smallest unit of security that can be exchanged. The new minimum amounts to.01 cents.
Because of this shift, some traders often mean 1 cent when using the word "teenie." Some traders (i.e., scalpers) use teenagers in their strategies, but with decimalisation, these strategies can be harder to take advantage of as spreads are typically smaller than 0.0625.
Historical Pricing and the Teenie
Pricing activity in the eighths dates back hundreds of years when Spanish merchants used gold doubloons to facilitate trade that could be divided into two, four, or even eight bits and were countable by hand. Spanish merchants chose not to include one's thumbs for counting because Spanish gold doubloons had a base of eight.
So when the New York Stock Exchange (NYSE) was set up about 200 years later, it was based on this Spanish trading system: trading began with this base-eight denomination, and 1/8 of a dollar, or 12.5 cents, became the spread, or the smallest amount that a stock could change in value.