Tick size, tick value and point value
Lesson 5 · about 9 min
Four numbers describe the money side of any futures contract. Once you can read them off a spec sheet and combine them, every P&L, stop and sizing question in futures becomes arithmetic. Most beginner mistakes in futures come from mixing two of them up.
The four numbers
| Term | Meaning | ES example |
|---|---|---|
| Multiplier | Dollars per one unit of the quoted price | $50 per index point |
| Point value | Same thing as the multiplier, said differently | $50 per point |
| Tick size | The smallest price increment the exchange allows | 0.25 index points |
| Tick value | Dollars per tick = tick size × multiplier | 0.25 × $50 = $12.50 |
"Point" means one whole unit of the quoted price: one index point for ES, one dollar per barrel for CL, one dollar per ounce for GC, one full point of par (1.00) for a Treasury bond. "Tick" means the smallest step price can take. The relationship is always:
tick value = tick size × multiplier
and therefore
P&L = (exit − entry) × multiplier = number of ticks × tick value
Both formulas give the same answer; use whichever your platform makes easier. Charts quote in points; the DOM (order book) and fills are in ticks.
Worked from the spec
Crude oil (CL): contract unit 1,000 barrels, quoted in dollars per barrel, minimum fluctuation $0.01 per barrel.
- Multiplier = 1,000 (each $1 move per barrel is $1,000 per contract).
- Tick size = 0.01.
- Tick value = 0.01 × 1,000 = $10.
- A move from 78.00 to 78.50 = 50 ticks = $500, or 0.50 points × $1,000 = $500.
Gold (GC): contract unit 100 troy ounces, quoted in dollars per ounce, minimum fluctuation $0.10.
- Multiplier = 100.
- Tick size = 0.10.
- Tick value = 0.10 × 100 = $10.
- A move from 2,300.0 to 2,312.5 = 125 ticks = $1,250, or 12.5 points × $100 = $1,250.
Notice that CL and GC have the same tick value ($10) but very different point values ($1,000 versus $100). If someone says "I risk 20 ticks" on gold that is $200; on crude it is also $200. If they say "I risk 2 points" it is $200 on gold and $2,000 on crude. The word matters.
Micro contracts are one-tenth of everything
Every micro contract in this course has the same tick size as its parent and one-tenth the multiplier, so one-tenth the tick value:
| Full | Tick size | Tick value | Point value | Micro | Tick value | Point value |
|---|---|---|---|---|---|---|
| ES | 0.25 | $12.50 | $50 | MES | $1.25 | $5 |
| CL | 0.01 | $10 | $1,000 | MCL | $1 | $100 |
| GC | 0.10 | $10 | $100 | MGC | $1 | $10 |
Ten micros equal one full contract in exposure. They do not equal it in cost: exchange fees on micros are less than one-tenth of the full-size fee in some cases and more in others, so ten MES is usually a little more expensive to trade than one ES. Module 5 puts numbers on that. What matters here is that the price, tick size and chart are identical; only the dollars per tick change.
Key idea: Tick value = tick size × multiplier. P&L = ticks × tick value. Say "points" or "ticks" out loud and know which you mean, because on crude the two differ by a factor of one hundred.
Reading a stop in dollars
The risk course sizes every trade from the stop. In futures the stop is measured in points or ticks and converted to dollars per contract:
dollars at risk per contract = stop distance in points × point value
Then:
contracts = risk budget ÷ dollars at risk per contract, rounded down
Example: $10,000 account, 1% risk = $100. You want a 6-point stop on the S&P.
| Contract | Stop | Risk per contract | Contracts at $100 budget |
|---|---|---|---|
| ES | 6 pt | 6 × $50 = $300 | 0 (cannot trade) |
| MES | 6 pt | 6 × $5 = $30 | 3, risking $90 |
The answer for ES is zero. Not "one and hope", zero. This is the single most useful calculation in the course and the whole reason micros exist.
Where to get the numbers
Never rely on memory or on a forum post for a spec. The exchange's contract specification page lists the contract unit, price quotation, minimum price fluctuation and its dollar value. Brokers reproduce this in their product tables. The pip and tick value calculator on this site has a futures tab that gives tick value and point value for the common contracts and converts a stop in points into dollars per contract; use it to check every calculation in this module.
Try it: Using the calculator, enter a 12-tick stop for MES, MNQ, MCL and MGC and record the dollar risk per contract for each. Then compute how many contracts of each you could hold at a $60 risk budget. Notice that the "same" 12-tick stop is a different dollar amount in every product.
Recap
- Multiplier (point value) is dollars per whole unit of price; tick size is the smallest increment; tick value = tick size × multiplier.
- P&L = (exit − entry) × multiplier, or ticks × tick value.
- CL and GC share a $10 tick but have $1,000 and $100 points; the word you use matters.
- Micros have the same tick size and one-tenth the multiplier of their parent.
- Contracts = risk budget ÷ (stop in points × point value), rounded down; zero is a valid answer.