Kalshi Tick Size

#Definition

Kalshi Tick Size is $0.01 (one cent). All [Kalshi](/wiki/kalshi) contracts trade in penny increments, with each contract paying out$1.00 if the outcome occurs and $0.00 if it doesn't.

#How It Works

#Contract Structure

Kalshi contracts are binary event contracts:

Contract value if Yes: $1.00
Contract value if No:  $0.00
Tick size:            $0.01
Price range:          $0.01 to $0.99

Example: Buy "Yes" at $0.65
- Pay: $0.65 per contract
- Win: Receive $1.00 (profit $0.35)
- Lose: Receive $0.00 (loss $0.65)

#Regulated Exchange

As a CFTC-regulated Designated Contract Market (DCM), Kalshi's tick size is:

• Standardized across all markets
• Enforced by exchange rules
• Consistent with traditional futures conventions

#Price and Probability

#Impact on Trading

#Spread Costs by Price Level

The percentage impact of the minimum $0.01 spread varies dramatically depending on the contract price. Lower-priced contracts face significantly higher spread costs.

#Kalshi Fee Structure

Kalshi's fee structure interacts with the tick size to determine the total cost of a round-trip trade.

Total Round-Trip Cost: Spread ($0.01) + Entry Fee ($0.01) + Exit Fee ($0.01) = **$0.03 minimum**

#Developer Guide: Break-Even Calculation

To be profitable, your trade must cover the entry price, fees, and the spread. Use this logic to calculate your break-even price:

/**
 * Calculates the price needed to break even on a Kalshi trade.
 * @param {number} entryPrice - The price you bought at (e.g., 0.60)
 * @param {number} contracts - Number of contracts (default 1)
 * @returns {object} - Break-even price and required tick movement
 */
function calculateBreakEven(entryPrice, contracts = 1) {
  const tickSize = 0.01;
  const exchangeFee = 0.01; // Simplified per contract
  
  // Total cost to enter
  const totalCost = (entryPrice * contracts) + (exchangeFee * contracts);
  
  // To exit without loss, you need to cover the exit fee as well
  // Revenue needed = Total Cost + Exit Fees
  const revenueNeeded = totalCost + (exchangeFee * contracts);
  
  // Price per contract needed
  const breakEvenPrice = revenueNeeded / contracts;
  
  // Round up to nearest valid tick
  const validBreakEven = Math.ceil(breakEvenPrice / tickSize) * tickSize;
  
  return {
    breakEvenPrice: parseFloat(validBreakEven.toFixed(2)),
    ticksNeeded: Math.round((validBreakEven - entryPrice) / tickSize)
  };
}

// Example: Buying at $0.60
console.log(calculateBreakEven(0.60));
// Output: { breakEvenPrice: 0.62, ticksNeeded: 2 }

#Kalshi-Specific Features

#Series and Brackets

Many Kalshi markets use bracket series:

Example: "S&P 500 closing price on Dec 31"

Bracket contracts:
- Above 4,800: $0.45
- Above 4,900: $0.32
- Above 5,000: $0.18
- Above 5,100: $0.08

Each bracket trades with $0.01 tick size independently.

#Position Limits

Kalshi enforces position limits:

• Maximum contracts per market varies
• Tick size doesn't affect limits
• Large orders may need to be split

#Settlement in USD

Unlike crypto-based platforms:

• Prices are in actual USD
• Bank transfers for deposits/withdrawals
• No stablecoin conversion needed
• Tick matches US currency precisely

#Comparison with Polymarket

Both platforms use a standard 1-cent tick for the majority of trading, but Polymarket's dynamic tick allows for finer precision (<1%) which Kalshi does not currently support.

#Trading Examples

#Example 1: Liquid Market

Market: "Fed to raise rates in March?"
Book:
  Bid: $0.72 (500 contracts)
  Ask: $0.73 (450 contracts)

Spread: $0.01 (1 tick, minimum possible)
Spread %: 1.4%

This is excellent liquidity - tight spread, good depth.

#Example 2: Illiquid Market

Market: "Will obscure event happen?"
Book:
  Bid: $0.15 (25 contracts)
  Ask: $0.22 (30 contracts)

Spread: $0.07 (7 ticks)
Spread %: 46%

Wide spread indicates low liquidity and high trading cost.

#Example 3: Extreme Price

Market: "Rare event to occur?"
Book:
  Bid: $0.02 (100 contracts)
  Ask: $0.04 (75 contracts)

Spread: $0.02 (2 ticks)
Spread %: 100% of bid price!

Very expensive to trade - only for high conviction.

#Order Types and Tick Size

#Limit Orders

Valid Kalshi limit orders:
- Buy 10 Yes @ $0.55  ✓
- Sell 5 No @ $0.40   ✓
- Buy 100 Yes @ $0.01 ✓

Invalid (rejected):
- Buy 10 Yes @ $0.555 ✗ (sub-penny)
- Buy 10 Yes @ $0.00  ✗ (below minimum)
- Buy 10 Yes @ $1.00  ✗ (above maximum)

#Market Orders

Market orders execute at best available prices:

• May cross multiple tick levels for large orders
• Slippage measured in ticks
• Use limits in thin markets

#Practical Tips for Kalshi

#1. Account for All Costs

True expected profit =
  (Win probability × $1.00)
  - Entry price
  - $0.02 fees

#2. Consider Bracket Strategies

With $0.01 ticks on bracket series:

• Can create precise probability distributions
• Spread positions across price levels
• Manage risk with defined outcomes

#3. Watch for Price Clustering

Common clustering at psychological levels:

• $0.50 (coin flip)
• $0.25,$0.75 (quarter probabilities)
• $0.10,$0.90 (low/high confidence)

#4. Use the Desktop Platform

Kalshi's desktop interface shows:

• Full order book depth
• Each tick level's volume
• Historical tick-by-tick data

#Tick Size in Kalshi's History

#Launch (2021)

Kalshi launched with $0.01 tick size:

• Matched industry standards
• Simple for retail traders
• Compatible with USD settlement

#Evolution

The tick size has remained constant:

• No plans for sub-penny trading
• Sufficient for current market depth
• Regulatory simplicity

#Related Terms

• Kalshi
• Tick Size
• Polymarket Tick Size
• Bid-Ask Spread
• Order Book
• Position Limits (Kalshi)
• CFTC