Contracts, Ticks, and Points

The Numbers You Must Know Cold

Before you risk a dollar, you need to know exactly what a single tick of movement costs you in real money — for the exact contract you're trading. Get this wrong and every risk calculation downstream is wrong too.

Point vs. Tick — Know the Difference

A point is a full unit of price movement (e.g., the index goes from 18,500.00 to 18,501.00 — that's one point). A tick is the smallest price increment a contract is allowed to move, defined by the exchange. Most index futures don't move in whole points — they move in fractional tick increments, and each contract has its own tick size and dollar value per tick.

The Full Specification Table

Note the pattern: NQ and MNQ share the same tick size (0.25) but MNQ is exactly 1/10th the dollar value of NQ — that's the point of "micro" contracts, they let you trade the same instrument with a tenth of the capital and risk. Same relationship between ES and MES.

GC and CL have different tick sizes entirely (0.10 and 0.01 respectively) because they're priced differently — gold in dollars per troy ounce, crude oil in dollars per barrel. Never assume a tick size carries over between products.

Why This Matters More Than It Sounds Like It Should

Every stop-loss, every position size, and every profit target you'll ever set is really just "some number of ticks or points, converted to dollars." If you don't know the dollar-per-tick value cold, you cannot reliably size a position, and sizing is the single most common place new futures traders blow up an account — not because their read on the market was wrong, but because they never calculated what a loss would actually cost before entering.

Worked Example: Sizing a Stop on MNQ

Say you're trading MNQ and your setup calls for a 12-point stop-loss — the distance between your entry and where you'll exit if the trade goes against you.

Step 1 — find the dollar value per point. From the table: MNQ is $2.00 per point.

Step 2 — calculate dollar risk per contract. 12 points x $2.00/point = $24 per contract.

Step 3 — apply your risk budget. Say your rule is to risk no more than $150 on any single trade. $150 / $24 per contract = 6.25, which rounds down to 6 contracts (you always round down — rounding up means accepting more risk than your budget allows).

Step 4 — sanity check the actual dollar risk. 6 contracts x $24 = $144 actual risk, safely under your $150 budget.

Worked Example: Same Trade, Wrong Contract

Now imagine you made an easy mistake — you meant to size for MNQ but pulled up the NQ tick value ($5.00 per tick / $20 per point) by mistake.

12 points x $20/point = $240 per contract. If you then applied the same "6 contracts" sizing math you did for MNQ, you'd be risking 6 x $240 = $1,440 — nearly ten times your intended $150 budget, on a single trade. This is exactly the kind of error that ends accounts, and it comes from a data-entry mistake, not a bad market read.

A Practical Habit

Before every trading session, say the dollar-per-point value of the contract you're about to trade out loud, or write it at the top of your trading journal for the day. It sounds excessive. It is also nearly costless, and it is the single cheapest insurance against the sizing mistake above.

GC and CL: A Quick Second Example

Say you're trading one GC (gold) contract with an 8-point stop. 8 points x $100/point = $800 of risk on a single contract — GC is a much larger dollar-per-point instrument than the micros, and one full-size contract can represent serious risk even with a modest-looking point stop. This is exactly why traders sizing up into commodities need to re-run this math every time, rather than assuming familiar position sizes from index futures transfer over.