Trading term
What is Tick size?
Tick size is the smallest price increment a contract can move — the minimum step between one quote and the next. Each tick has a fixed dollar value (the 'tick value'), so tick size and tick value together determine what a one-tick move is worth. They're fundamental to sizing and pricing futures trades.
Every futures contract trades in defined increments. A contract might move in ticks of 0.25 index points or $0.01 per barrel — it can't quote a price between ticks. Because each contract controls a set quantity of the underlying, that minimum price step translates into a fixed dollar amount: the tick value. For the E-mini S&P 500, for instance, one tick of 0.25 points equals $12.50 per contract. Knowing the tick value tells you exactly how much each minimum move puts into or takes out of your account.
Tick size and value are practical necessities, not trivia. They determine the precision of your entries and exits, the real cost of the bid-ask spread (often just one tick on liquid contracts), and how you calculate risk and position size — a stop placed X ticks away has a precise dollar risk. Different contracts have very different tick values, so a move that looks small in points can be large in dollars, or vice versa. Reading a contract's tick specifications is a basic step before trading it.
A contract can only trade at fixed increments (ticks). Here each 0.25-point tick is worth $12.50 per contract, so tick size and tick value convert a price move into exact dollars.
For example
The E-mini S&P 500 future moves in ticks of 0.25 points, each worth $12.50. If the index moves 4 points in your favour, that's 16 ticks × $12.50 = $200 per contract. A stop 8 ticks away risks exactly $100 per contract — precise, contract-specific dollar amounts set by the tick size and value.
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Explore Premium →Why it matters to you
Tick size and tick value are how abstract price moves become concrete dollars — they're the units you actually calculate risk, reward and position size in. Trading a futures contract without knowing its tick value is trading blind to how much each move is really worth.
⚠ A small tick can be big dollars
Traders eyeball a contract's price moves in points and forget that the tick value converts them into very different dollar amounts across contracts. A 'small' one-point move can be $50 on one contract and $1,000 on another. Sizing a position without checking the tick value can quietly put far more (or less) at risk than intended.