All You Need to Know About Futures Tick Value and Contract Size

7/14/2025, 9:35:10 AM

All You Need to Know About Futures Tick Value and Contract Size

Futures trading can be advantageous, but only for those who understand the mechanics underlying each position. Two critical blocks are shaping this understanding. They are tick value and contract size. These numbers may seem insignificant, but they're the backbone of every futures trade you place. This guide offers insight for beginner and intermediate traders who are looking to refine their edge, avoid costly mistakes, and take more calculated risks.

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What Is a Futures Contract?

Fundamentally, a futures contract refers to a legal agreement used to trade an asset at a specific price on a predetermined date. Unlike stocks or ETFs, which are about ownership, a futures contract symbolizes an obligation, unless it's closed before expiry.

These are the futures existing among asset classes.

The contracts are standardized and traded on regulated exchanges like CME Group, ICE, or Eurex. Since they are standardized futures, they are highly liquid and ideal for both short-term speculation and long-term hedging.

Futures are leveraged instruments, for which you only require a margin deposit (a small percentage of the contract value) to be able to open a trade. This leverage enables you to control prominent positions, but losses can pile up fast if you're not careful enough.

Understanding Tick Size vs. Tick Value

Beginner traders often confuse tick value for tick size, but both serve a different purpose. At the same time, the tick size includes the slightest price movement that a futures contract can make. On the other hand, the tick value is about the monetary gain or loss that price movement is associated with.

To calculate the tick value, you have to multiply the tick size by the contractor's multiplier or size. Here's how that plays out:

Example 1: E-mini S&P 500 (ES)

If the tick size is 0.25 index points, multiply it by $50. The generated tick value is $12.50.

Example 2: Crude Oil Futures (CL)

If the tick size is $0.01 and the contracted size of 1,000 barrels is multiplied by it, then the tick value is $10.

Example 3: Gold Futures (GC)

If the tick size of $0.10 and the contract size of 100 ounces are multiplied by each other, then the tick value is $10.

Knowing the tick value of a contract provides you with instant insight into how much money is gained or lost with each market move. It's an essential part for setting profit targets, realistic stop-losses, and overall position sizing.

What Is Contract Size in Futures?

Contract size is the quantity of any underlying asset that the futures contract represents. It dictates how sensitive your position is to price movements. It directly impacts your tick value.

There are three common types:

Standard Contracts: These contracts suit institutional traders or large accounts. For example, each gold (GC) covers 100 ounces.
Mini Contracts: These are smaller than standard contracts and are best for active retail traders. For example, each Mini Dow (YM) covers $5 per index point.

Micro Contracts: These contracts are even smaller and are designed for beginner or conservative traders. For example, each Micro E-mini S&P 500 (MES) has a $5 multiplier.

These are some of the commonly used contract sizes:

Crude Oil (CL): 1,000 barrels.
Gold (GC): 100 ounces.
Micro E-mini Nasdaq-100 (MNQ): $5 per index point.

By selecting the right contract size, you customize your exposure to match your account size and risk tolerance.

How Tick Value and Contract Size Affect Profit and Risk

Let’s assume you are looking to trade an E-mini S&P 500 (ES) contract. You enter the trade, and the price favors you by moving by 10 ticks. So the tick value is estimated at $12.50, and once multiplied by 10 ticks, you get a $125 profit. However, if the trade ends up going against you by the same amount, you lose $125. If you multiply this across multiple contracts, the stakes rise quickly.

Real-World Scenario: Crude Oil Trade

Let's say you don’t risk more than $200 on your crude oil trade. Since every tick is around $10, you divide $200 by $10 and get 20 ticks. As long as your stop-loss is set 20 ticks from your entry point, you can trade one contract. But if you trade too many contracts without reestimating the tick value, you might risk a lot more than you intend.

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Tools for Futures Traders

Trading in today's age doesn't require you to memorize each tick value or contract spec. There are numerous platforms and calculators available to simplify the process:

Tick value calculators: Simply plug in the symbol to access all the info.
Broker platforms, such as NinjaTrader, ThinkorSwim, and TradingView, give tick values and contract specs automatically.
The CME Group website gives you the detailed specifications for every listed contract.
Funding platforms like FundingTicks offer you real-time evaluation metrics along with performance dashboards.

By pairing these tools with a good risk management strategy, such as never risking above 1–2% of your account in one trade, you are helped toward a solid and stable start.

Frequently Asked Questions (FAQs)

Does the tick value change?

The tick value is fixed on each contract. But switching between micro, mini, and standard contracts results in different tick values.

In what ways does volatility affect tick value?

While volatility does not change the tick value, it impacts how often and widely prices move. This implies that your P&L can swing faster, so smaller size and wider stops are required in volatile markets.

Which are the lowest tick value contracts for beginners?

The lowest tick value contracts are micro contracts. For example:

The Micro E-mini S&P 500 (MES) is priced at $1.25 per tick.
The Micro E-mini Nasdaq-100 (MNQ) is priced at $0.50 per tick.

With these ticks, you get market exposure with a limited downside.

How many ticks are there in a point?

The number of ticks depends on the contract. For example:

E-mini S&P 500 (ES): 4 ticks equal 1 point, as 0.25 x 4 = 1.
Crude Oil (CL): 100 ticks equals a $1 move, as $0.01 x 100 = 1.

Why are there unusual tick sizes in some contracts?

The tick sizes are defined by exchanges based on liquidity, volatility, and the traders' needs. For instance, a 30-Year Treasury Bond future (ZB) would use 1/32nd increments, grounded in old bond pricing conventions.

Conclusion

Tick value and contract size entail much more than just numbers on a trading platform. From the outset, they serve as your key tools for managing profits, losses, and risk exposure like a pro.

By understanding these metrics, you can carefully size your positions, plan exits clearly, and react to market conditions in a disciplined way. It doesn’t matter if you're trading crude oil, gold, or stock indices; knowing your tick value is the way to go, as it tells you how much every price move truly means.

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