Ticks, points and why they differ
A tick is the smallest price increment a contract can move. A point is a full unit of the price. They are not the same thing, and the gap between them is where most futures sizing errors begin.
The E-mini S&P 500 (ES) moves in ticks of 0.25 index points. Each tick is worth $12.50. So a full point is four ticks — $50. If you set a stop "8 points away" and size it as though 8 points meant 8 ticks, you have under-counted your risk by a factor of four.
The safest habit is to convert everything to ticks before sizing, because the tick value is the number the exchange actually publishes:
ticks = stop distance in points ÷ tick size risk per contract = ticks × tick value
Tick values for the common contracts
| Contract | Symbol | Tick size | Tick value | Per point |
|---|---|---|---|---|
| E-mini S&P 500 | ES | 0.25 | $12.50 | $50 |
| Micro E-mini S&P 500 | MES | 0.25 | $1.25 | $5 |
| E-mini Nasdaq 100 | NQ | 0.25 | $5.00 | $20 |
| Micro E-mini Nasdaq | MNQ | 0.25 | $0.50 | $2 |
| Crude Oil | CL | 0.01 | $10.00 | $1,000 |
| Micro Crude Oil | MCL | 0.01 | $1.00 | $100 |
| Gold | GC | 0.10 | $10.00 | $100 |
| Micro Gold | MGC | 0.10 | $1.00 | $10 |
Note the pattern: each micro is exactly one tenth of its full-size counterpart. That relationship is the reason micros matter, and the next two sections are about why.
Sizing a futures position
The general formula applies unchanged — risk amount divided by the money at stake per contract:
contracts = risk amount ÷ (ticks in stop × tick value)
Because tick value is fixed and published, futures are arguably the easiest market to size accurately. There is no currency conversion as in forex, and no per-share price to track as in equities. You look the number up once and it stays true.
What futures do not give you is granularity. Shares trade in single units and forex in hundredths of a lot; futures trade in whole contracts, and that constraint drives everything below.
Worked example: the three-quarter contract problem
A $30,000 account, short ES
Risk 1% = $300. Entry 5,412.00, stop 5,420.00 — an 8 point stop, which is 32 ticks.
contracts = 300 ÷ (32 × 12.50) contracts = 300 ÷ 400 = 0.75
You cannot trade three-quarters of an ES contract. There are exactly three honest responses, and one dishonest one.
| Option | Actual risk | Verdict |
|---|---|---|
| Round up to 1 ES | $400 (1.33%) | A 33% overshoot on your stated risk. Tempting precisely when you feel most certain. |
| Trade 7 MES | $280 (0.93%) | Correct. 32 ticks × $1.25 × 7 = $280, just inside target. |
| Tighten the stop to 6 points | $300 (1.00%) | Only valid if there is a real level at 5,418. Never move a stop to justify size. |
| Skip the trade | $0 | A legitimate answer. Not every setup suits every account. |
The micro route wins almost every time, and it is the reason a $30,000 account can now trade index futures with genuine risk discipline rather than approximate it.
What micros actually changed
Before micro contracts existed, a trader with a $30,000 account sizing 1% per trade on ES faced a permanent dilemma: the arithmetic almost always returned a fraction, and the only available choices were to over-risk by rounding up or to not trade.
At one tenth the size, micros turn a coarse dial into a fine one. The same $300 risk that bought "0.75 of an ES" buys 7 MES with $20 to spare. Across a year of trades, that difference is the gap between a stated 1% risk and an actual one that drifts between 0.7% and 1.33% depending on where the rounding happened to fall.
The trade-off is cost. You pay commission per contract, so seven micros cost more in fees than one mini for the same exposure. For most retail accounts that is a small price for accurate sizing — but it is a real cost, and on very short holds with tight stops it is worth checking rather than assuming.
Margin is not risk, and neither is notional
Three different numbers get conflated here, and keeping them apart is most of what competent futures trading requires.
- Notional value — what the contract controls. One ES at 5,400 is 5,400 × $50 = $270,000 of index exposure.
- Margin — what you must post to hold it. Perhaps $12,000–$15,000 intraday for ES, set by the exchange and your broker, and revised upward in volatile conditions.
- Risk — what you lose if stopped. With a 32 tick stop, $400.
All three are true at once and none substitutes for the others. Sizing on margin — "I can afford two contracts" — ignores risk entirely and is how accounts get destroyed by a single bad session. And because day-trading margin can be a fraction of overnight margin, a position that was comfortable at 3pm can breach requirements at the close simply by being held.
Where futures sizing catches people out
- Overnight margin increases. Brokers raise margin requirements at the close, often several-fold. A position sized against intraday margin can be force-liquidated for holding it — not for being wrong.
- Contract rollover. Futures expire. Rolling to the next month means closing and reopening at a different price, and the volume migrates before the expiry date, so a stop resting in the old contract can be sitting in a thin market.
- Limit moves and halts. Some contracts have daily price limits. When one is hit, you cannot exit at any price, and your stop is simply not reachable until trading resumes.
- Overnight sessions are thin. The same contract that fills instantly at 10am can slip badly at 3am. A stop that assumes daytime liquidity is optimistic outside those hours.
The underlying method is the same one used everywhere else — see position sizing explained. For using index futures to hedge an equity portfolio rather than to speculate, see beta-weighted hedging.