Glossary
Tick value
Tick value is the money gained or lost when a futures contract moves by its smallest price step, called a tick.
What it means
Every futures contract has a tick size, the smallest price change it can make, and a tick value, both set in the exchange's contract specifications. Tick value times the number of ticks moved, times the number of contracts, gives the profit or loss on a trade. Micro contracts carry a fraction of the tick value of the standard contract on the same market.
Futures prop firms set loss limits in money and cap the number of contracts, so tick value is how traders turn a stop into a dollar risk. A few ticks on a standard contract can be a large share of a daily limit. Traders should check the specifications of every contract they trade, and firms should list tick values next to contract limits.
Worked example
Illustrative numbers: a contract has a tick size of 0.25 points and a tick value of $12.50. A trader holding 2 contracts sees price move 10 ticks against them, a loss of 10 times $12.50 times 2, or $250. With a $1,000 daily loss limit, that is a quarter of the day's room.
Free tools that use this
- Pip value calculatorThis calculator shows what one pip, point or tick is worth for your position, in your account currency. In words: pip value equals the size of one...
- Futures tick value calculatorThis calculator shows what a price move is worth on a futures contract. In words: the number of ticks in the move, times the value of one tick,...
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