Futures contract math

Points and ticks

Futures prices move in points and ticks.

• A point is a price move of 1.00. Nasdaq futures going from 20,000 to 20,001 moved 1 point.
• A tick is the smallest step price can take. For Nasdaq and S&P 500 futures, one tick is 0.25, a quarter of a point. So 4 ticks make 1 point.

Every contract has a fixed dollar value for each tick and each point. These come from the exchange that runs the market, CME Group. Once you know them, the math is easy.

Stock index futures

• NQ (E-mini Nasdaq 100): $20 per point, so one 0.25 tick is $5.
• MNQ (Micro E-mini Nasdaq 100): $2 per point, one tick is $0.50.
• ES (E-mini S&P 500): $50 per point, one tick is $12.50.
• MES (Micro E-mini S&P 500): $5 per point, one tick is $1.25.

Notice that each micro is exactly one tenth of its big brother. Micros let smaller accounts trade the same market with smaller dollars.

Example

Pretend Nasdaq futures move from 20,000.00 up to 20,012.50. That's 12.5 points (50 ticks).

• 1 NQ: 12.5 x $20 = $250
• 1 MNQ: 12.5 x $2 = $25

If you were on the wrong side, those are your losses instead.

Gold futures

Gold is priced in dollars per ounce.

• GC (gold) holds 100 ounces. Each $1 move in gold is worth $100. One tick is $0.10, worth $10.
• MGC (micro gold) holds 10 ounces. Each $1 move is worth $10. One tick is $0.10, worth $1.

Example

Pretend gold drops from $3,000.00 to $2,992.50. That's a $7.50 move.

• 1 GC: 7.50 x $100 = $750
• 1 MGC: 7.50 x $10 = $75

Plug it into position sizing

The recipe: size = dollars at risk, divided by (stop distance x dollars per point).

A $50,000 account risks 1%, which is $500, on a gold trade with a $4 stop:

• GC: 4 x $100 = $400 per contract. $500 divided by $400 = 1.25, so 1 contract.
• MGC: 4 x $10 = $40 per contract. $500 divided by $40 = 12.5, so 12 contracts.

Things that trip people up

• Mixing up points and ticks. "I lost 8" means very different things. 8 ticks on NQ is $40. 8 points on NQ is $160.
• Fees on every contract. You pay commissions and exchange fees on each contract, when you get in and again when you get out. Twelve micros cost more in fees than one big contract.
• Contracts expire. Each futures contract has an end date. Most traders switch, or "roll," to the next one before it ends. Your trading app shows which month you're trading.
• Rules can change. If you're ever unsure, check the contract page on the exchange's website.

Remember

• A tick is the smallest move. A point is a move of 1.00.
• NQ is $20 a point, MNQ $2. ES is $50 a point, MES $5.
• Gold: GC is $100 per $1 move, MGC is $10 per $1 move.
• Micros are one tenth the size, which makes them easier to fit inside a 1% risk.