Contract specs, ticks and notional value
Every futures P/L calculation starts from the multiplier and tick size. Know them before placing an order.
Leverage risk. Futures losses can exceed your margin deposit. Contract specs, margins, sessions and funded-account rules here are illustrative; verify current specifications with the exchange, your broker or the provider.
Before you start
Illustrative specs used in this track (verify current specifications with the exchange and your broker before relying on them): ES = $50 per index point, minimum tick 0.25 = $12.50. MES = $5 per index point, tick 0.25 = $1.25. Margin figures are made-up round numbers for arithmetic practice, not current requirements.
Futures are leveraged. A small percentage move in the underlying can produce losses larger than your margin deposit, and in some circumstances larger than your account balance. Brokers can liquidate positions without notice when margin is insufficient.
Reading a spec sheet
A futures contract is a standardised agreement to buy or sell an underlying at a future date. The spec sheet defines the multiplier (dollars per point), the minimum price increment (tick), tick value (tick × multiplier), trading hours, expiration months and settlement method.
Notional value = price × multiplier. It is the economic exposure you control — usually far larger than the cash deposited as margin.
Micro contracts (like MES in our illustration) are a fraction of the standard size and let learners express the same view with smaller dollar swings.
Worked example
ES vs MES at an index level of 5,000 (illustrative specs)
- ES notional = 5,000 × $50 = $250,000. MES notional = 5,000 × $5 = $25,000.
- Tick value: ES 0.25 × $50 = $12.50; MES 0.25 × $5 = $1.25.
- A 10-point move: ES = 10 × $50 = $500 per contract; MES = $50.
- 10 points = 40 ticks. Check: 40 × $12.50 = $500 ✓.
Points × multiplier = dollars. Ticks × tick value = the same dollars.
Common misconceptions
“A futures contract costs its margin.”
Margin is a deposit; your exposure is the full notional value.
“Specs never change.”
Exchanges can change margins, hours and sometimes contract terms. Verify current specs.
Checkpoint