TLDR: Profit or Loss in futures trading = (Tick Value × Ticks Moved) × Contracts. More ticks and contracts increase the profit or loss potential.
Calculating Profit and Loss (PnL) is one of the most important skills in futures trading. Since futures contracts move in fixed tick sizes, every price change directly affects your balance. Understanding how tick size, tick value, and the number of contracts work together helps traders accurately measure risk and reward. This knowledge ensures you can plan trades with confidence and avoid unexpected results.
Understanding Key Concepts
Before calculating profit or loss in futures trading, you need to understand these core terms:
Tick Size: The smallest possible price movement allowed for a futures contract. It differs across contracts.
Tick Value: The monetary amount gained or lost when the price moves by one tick.
Number of Ticks: The total movement in ticks between your entry and exit price.
Number of Contracts: The number of contracts you are trading. More contracts amplify profits or losses.
Once these basics are clear, you can calculate PnL manually or use a futures profit calculator.
What is a Tick in Futures Trading?
A tick is the minimum price change for a futures contract. Prices move in fixed steps, with no smaller increments possible.
Example:
If the tick size is 0.25 points, the price moves in increments of 0.25 (6000.00 → 6000.25 → 6000.50).
Prices will not change by smaller amounts such as 6000.10.
Each tick has a tick value, showing the money gained or lost per tick per contract. For example, the E-mini S&P 500 futures contract has a tick value of $12.50.
Calculating Profit and Loss Using Ticks for Futures Trading
Formula:
Profit/Loss = (Tick Value × Number of Ticks Moved) × Number of Contracts
Example 1: One Contract Trade
You trade 1 contract of the E-mini S&P 500 futures, and the price moves 5 ticks in your favor (6000.00 → 6001.25).
Tick Size: 0.25 points
Tick Value: $12.50
Number of Ticks: 5
Calculation:
1 tick = $12.50
5 ticks = 5 × $12.50 = $62.50
Profit = $62.50
Example 2: Multiple Contracts
You trade 3 contracts of the E-mini S&P 500 futures, and the price moves 5 ticks in your favor.
Tick Size: 0.25 points
Tick Value: $12.50
Number of Ticks: 5
Contracts Traded: 3
Calculation:
1 tick = $12.50
5 ticks = 5 × $12.50 = $62.50
3 contracts = 3 × $62.50 = $187.50
Profit = $187.50
Key Points to Remember
A tick is the smallest price movement in a futures contract.
Tick size is how much the price can move in one step, and tick value is how much money you make or lose per tick.
The more ticks the price moves in your favor, the higher your profit.
The number of contracts you trade multiplies your profit or loss.
If the price moves against you, the same calculation applies for your loss.