Ticks and points
Prices do not move smoothly. They move in tiny fixed steps, like the notches on a ruler. To understand any profit or loss in futures, you need two words: point and tick.
A point
A point is a move of 1.00 in the price. If the S&P 500 futures price goes from 6,000.00 to 6,001.00, it moved one point. (Those prices are made-up round numbers for the example, not real quotes.)
A tick
A tick is the smallest price move a contract is allowed to make. The exchange sets it, and it is listed on each contract’s specification page as the “minimum price fluctuation.”
For all four contracts in this course, one tick is 0.25 index points. Price moves like this:
6,000.00, then 6,000.25, then 6,000.50, then 6,000.75, then 6,001.00.
Count the steps: 4 ticks make 1 point. A price can never be 6,000.10 or 6,000.30. It must land on a quarter.
What a tick is worth
Each contract has its own dollar value per point (its multiplier, from Lessons 4 and 5). A tick is a quarter of a point, so a tick is worth a quarter of the point value.
| Symbol | Dollars per point | Tick size | Dollars per tick |
|---|---|---|---|
| ES | $50 | 0.25 | $12.50 |
| NQ | $20 | 0.25 | $5.00 |
| MES | $5 | 0.25 | $1.25 |
| MNQ | $2 | 0.25 | $0.50 |
You can always check the math yourself: tick size times dollars per point. For ES, 0.25 times $50 = $12.50. For MNQ, 0.25 times $2 = $0.50.
Doing the math on a trade
The recipe for profit or loss is always the same:
number of ticks moved, times dollars per tick, times number of contracts
Example with MNQ: you buy 1 MNQ and the price rises 8 points before you sell.
- 8 points times 4 ticks per point = 32 ticks
- 32 ticks times $0.50 = $16 profit
Same move with 1 NQ: 32 ticks times $5.00 = $160 profit.
You can also skip ticks and use points directly: 8 points times $2 per point = $16 for MNQ. Both routes give the same answer. Losses are calculated exactly the same way, just in the other direction.
Why traders talk in ticks
Traders often describe moves and risk in ticks or points instead of dollars, because the dollars depend on which contract and how many. “My stop is 20 ticks away” means the same thing on MNQ and NQ. Only the dollar amount changes. Learning to switch between ticks, points, and dollars quickly is one of the most useful skills you can build at this stage.
Key ideas
- A point is a 1.00 move in price.
- A tick is the smallest allowed move. For ES, NQ, MES, and MNQ it is 0.25, so 4 ticks = 1 point.
- Dollars per tick: ES $12.50, NQ $5.00, MES $1.25, MNQ $0.50.
- Profit or loss = ticks moved times dollars per tick times contracts.