Ticks, points and dollars

Futures traders talk in points, but your account talks in dollars. If you can't switch between the two in your head, you can't know what a trade really risks.

The good news is that the math is simple, because each contract has a fixed dollar value per point. Learn four numbers and you can work out almost any trade on the index futures most day traders use.

Ticks and points

A point is one full unit of the index price, and a tick is the smallest move the price can make. For the big index contracts, CME sets the tick at one quarter of a point. That means there are four ticks in every point, on every one of the contracts in this lesson.

If NQ goes from 20,000.00 to 20,001.00, it moved one point, or four ticks. If it only goes to 20,000.25, it moved a single tick.

The four numbers to know

• MNQ: $2 per point, $0.50 per tick.
• NQ: $20 per point, $5 per tick.
• MES: $5 per point, $1.25 per tick.
• ES: $50 per point, $12.50 per tick.

The formula is always the same: points times dollars per point times number of contracts. Run that and you get the dollar result of any move, win or lose.

Worked examples

Say you buy one MNQ contract and price rises 30 points, so you make 30 times $2, or $60. If you had three MNQ contracts, it's 30 times $2 times 3, or $180.

Now the same 30-point move on one NQ contract. That's 30 times $20, or $600. It's the same chart and the same move, but ten times the money.

On the S&P 500 side, a 10-point move on one MES is $50, and on one ES it's $500. Notice that ES and NQ points are not worth the same, so don't assume a point is a point across markets.

Turning a stop into dollars

This is the conversion that matters most. Before every trade, you should know your stop in points and what it costs in dollars. Use the same formula.

1. Measure the distance from your entry to your stop in points. Say it's 20 points.
2. Multiply by the dollars per point. On MNQ, 20 times $2 is $40.
3. Multiply by your contracts. Two MNQ means an $80 risk.
4. Add commissions and fees, which your broker or platform will list.

You can also run it backward. If you're only willing to lose $60 on a trade with a 15-point stop, each MNQ contract risks $30, so two contracts fit and three don't. The position size lesson goes deeper on this.

If you'd rather not do it by hand, the point value calculator on this site does the math for you. I still suggest doing a few by hand first, so the numbers stick.

One honest note: knowing your risk in dollars doesn't make a trade a good one. Most people who day trade lose money even when they know their numbers. This math is the floor you stand on, not an edge that makes you money.

The takeaway

There are four ticks in a point. MNQ is $2 a point, NQ $20, MES $5 and ES $50. Multiply points by dollars per point by contracts, and you'll always know what a stop really costs.

Do this today

• Write the dollars-per-point for MNQ, NQ, MES and ES on a card by your screen.
• Work out by hand what a 25-point stop costs on one, two and five MNQ contracts.
• Check your answers with the point value calculator at /calculator/.

Check yourself

Answer each one in your head, then open it to check.