Tick size
An exchange specifies a contract's tick size and the cash value associated with each tick. The tick value depends on contract size and quotation conventions, so it cannot be inferred safely from a generic number of decimal places. A futures gain or loss is the signed number of ticks moved multiplied by the value per tick and the number of contracts, subject to settlement terms. Tick size, contract maturity, quotation and margin rules must be checked for the actual instrument.
Worked example
A futures contract has a tick size of 0.01 price points and a tick value of $25. A favourable move of 0.08 points is eight ticks, producing $200 per contract before fees; three such contracts produce $600.
Common mistake
Assuming every currency or interest-rate future uses the same tick size or multiplying price points directly by tick value without converting to ticks.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AFM | Direct | September 2026–June 2027 |