Exotic pairs and the tick that arrives once in a while

[Shadow Trader]

On EURUSD, ticks arrive several times per second. On an exotic like USDTHB or USDHUF, a tick may arrive every few seconds, or every few tens of seconds in quiet hours.

The practical result is a feed that looks frozen. The price on the screen is the last quote, and it could be several seconds old. A trader looking at it sees the number and assumes it's live.

When the next tick arrives, it can be several pips away from the previous one. A market order placed during the quiet period is filled at the new price, not the displayed one. A stop is triggered by the jump, and the fill is wherever the next quote appears.

Charts on these pairs have a different look. Long flat stretches and abrupt vertical lines. Indicators calculated on such data behave oddly, since a moving average over "ten minutes" might contain only twenty price changes.

Counting ticks per minute before trading a pair is a simple check. If it falls below a few dozen in quiet hours, the pair isn't suited for rapid trading, whatever the daily range suggests.

Quote-based filters help. Define an age limit for the last quote, such as five seconds, and refuse to send a market order if the current quote is older than that. Combine it with a check that the spread is not above a few multiples of its recent average. Those two guards alone prevent most nasty surprises on thin pairs.

It's also smart to place orders as limits rather than market orders on these instruments, with a small tolerance, so the fill can't wander far from the intended price. The price of missing a trade is much smaller than the price of a fill 20 pips away from the screen.

What tick rate is considered the minimum for a pair to be tradable here?