Contract specs: tick size, tick value, contract size

The three numbers on the spec sheet

Before you trade a futures contract, you need to know what one tick is worth. Otherwise you're guessing at risk. Every futures contract has a published spec sheet, and three numbers matter more than the rest: tick size, tick value, and contract size.

Tick size is the smallest price increment the contract can move. For the E-mini S&P 500 (ES), the tick size is 0.25 index points. The price can be 5,200.00, then 5,200.25, then 5,200.50 — never 5,200.10. Tick value is the dollar amount that one tick is worth. For ES, one tick equals $12.50. Move four ticks (one full point), and that's $50 per contract. Contract size is the notional exposure — for ES, the multiplier is $50 per point, so at 5,200 the contract represents about $260,000 of S&P 500 exposure.

Here's a quick spec-sheet tour for the most-traded contracts: ES (E-mini S&P 500) — 0.25 tick, $12.50 per tick. NQ (E-mini Nasdaq) — 0.25 tick, $5 per tick. CL (Crude Oil) — 0.01 tick, $10 per tick. GC (Gold) — 0.10 tick, $10 per tick. Now the micros: MES (Micro E-mini S&P) — 0.25 tick, $1.25 per tick. MNQ (Micro E-mini Nasdaq) — 0.25 tick, $0.50 per tick. MCL (Micro Crude) — 0.01 tick, $1 per tick. MGC (Micro Gold) — 0.10 tick, $1 per tick. Print these. Tape them to your monitor. Knowing tick values cold makes every risk decision faster.

Quick worked example. You buy one MES contract at 5,200. Your stop is at 5,195 — that's 20 ticks (5 points × 4 ticks per point). Risk = 20 × $1.25 = $25 per contract. If your account is $500 and your risk rule is 5 percent per trade, $25 fits inside $25. You can take one contract. Same math with ES would be 20 × $12.50 = $250 — half your account on one trade. That's the practical case for starting in micros.

Recap: tick size + tick value + contract size = your risk math. Memorize the values for the contracts you trade. Micros let a $500 account participate at sensible position sizes.