Question 1

How is futures profit and loss calculated?

Accepted Answer

Futures P&L is calculated by finding the price difference between entry and exit, dividing by the tick size to get the number of ticks moved, then multiplying by the tick value and the number of contracts. For a long trade, P&L = (exit price - entry price) / tick size * tick value * contracts. For a short trade, the entry and exit are reversed.

Question 2

What is the difference between tick value and point value?

Accepted Answer

A tick is the minimum price increment a futures contract can move. The tick value is the dollar amount gained or lost per tick per contract. A point is one full unit of price movement (e.g., 1.00). The point value equals the tick value divided by the tick size. For ES futures, one tick (0.25 points) is worth $12.50, so one full point is worth $50.00.

Question 3

What is notional exposure in futures trading?

Accepted Answer

Notional exposure represents the total market value of a futures position. It is calculated by multiplying the entry price by the point value of the contract and by the number of contracts. For example, one ES contract at 5,000 has a notional exposure of 5,000 * $50 = $250,000. This is the amount of underlying asset the position controls.

Question 4

What is the difference between E-mini and Micro E-mini contracts?

Accepted Answer

E-mini contracts are electronically traded, smaller-sized versions of standard futures contracts. Micro E-mini contracts are even smaller -- typically 1/10th the size of an E-mini. For example, one ES (E-mini S&P 500) tick is worth $12.50, while one MES (Micro E-mini S&P 500) tick is worth $1.25. Micros allow traders to participate in futures markets with significantly less capital.

Question 5

How do I determine how many ticks a price has moved?

Accepted Answer

Divide the absolute price difference by the contract's tick size. For example, if ES moves from 5,000 to 5,010, the price moved 10 points. Since ES has a tick size of 0.25, that equals 10 / 0.25 = 40 ticks. Each tick is worth $12.50, so 40 ticks * $12.50 = $500 per contract.

Question 6

Does this calculator account for commissions and fees?

Accepted Answer

This calculator computes gross P&L before commissions, exchange fees, and other trading costs. Actual net profit will be lower by the total round-trip cost per contract, which varies by broker. Most futures brokers charge between $0.50 and $2.50 per side per contract for commission, plus exchange and NFA fees.

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