What is a tick in trading?
In one line: A tick is the smallest step a market's price can move. In futures, each tick has a fixed dollar value per contract.
A simple example
Most US stocks priced over $1 move in steps of $0.01. That one cent is the tick.
Futures work the same way, but each tick is worth a set amount of money per contract:
| Contract | Tick size | Value per tick |
|---|---|---|
| E-mini S&P 500 (ES) | 0.25 | $12.50 |
| Micro E-mini S&P 500 (MES) | 0.25 | $1.25 |
| E-mini Nasdaq-100 (NQ) | 0.25 | $5.00 |
| Micro E-mini Nasdaq-100 (MNQ) | 0.25 | $0.50 |
Say your stop loss is 8 ticks away. On one MES contract that's 8 × $1.25 = $10 at risk. On one ES contract, the same stop is $100. Same chart, ten times the money.
Try other contracts in the futures tick value calculator. Official contract specs are on cmegroup.com.
Why it matters
Ticks are how you turn a stop on the chart into dollars. Once you know the tick value, you can work out your position size so a loss costs only what you planned.
Forex uses a similar idea, called a pip.
A common mistake
Mixing up points and ticks. On ES, one point is four ticks. So 1 point = 4 × $12.50 = $50. A trader who thinks "a 5-point stop is $62.50" is off by a factor of four — the real risk is $250 per contract.
Always write your stop in ticks and dollars before placing the order. If those two numbers don't match your plan, the size is wrong.
For how futures compare with stocks, read futures vs stocks.
Questions
What is a tick chart?
A different meaning of the word. On a tick chart, each candle is built from a set number of trades instead of a set amount of time.
How much is one tick on ES?
0.25 points, worth $12.50 per contract.
What's the difference between a tick and a pip?
Both are small price steps. "Tick" is used for futures and stocks; "pip" is used for forex.
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