FOUNDATION BEGINNER

NQ, MNQ, ES, and MES Explained

This lesson explains the differences between NQ, MNQ, ES, and MES, including what each market tracks and how much its price movements are worth. By the end of the lesson, you should be able to calculate points, ticks, profit, loss, total trade risk, and an appropriate position size before entering a trade.

45 min readEducational lesson

🎯 LESSON OBJECTIVE

By the end of this lesson, you should be able to:

Understand why contract selection matters.
Identify the differences between NQ, MNQ, ES, and MES.
Understand points and ticks.
Calculate the dollar value of price movement.
Calculate profit and loss.
Calculate total trade risk.
Determine position size based on a maximum risk amount.
Understand the difference between margin and actual trade risk.
Understand how contract size can affect trading psychology.
Understand why micro contracts can still create significant risk.

1. WHY CONTRACT SELECTION MATTERS

Two traders can enter at the same price, exit at the same price, and capture the exact same market movement but finish with completely different financial results.

Why?

Because they may be trading different contracts or using a different number of contracts.

For example, one trader may trade MNQ while another trades NQ.

Both contracts follow the Nasdaq-100 futures market, but their monetary values are different.

A 10-point movement on one MNQ contract is worth:

10 × $2 = $20

The same 10-point movement on one NQ contract is worth:

10 × $20 = $200

The price movement was identical.

The financial exposure was not.

Before placing any trade, you must know:

Which contract you are trading
How much one point is worth
How much one tick is worth
How many contracts you are using
How far away your stop loss is
How much money you will lose if your stop is reached

You should never discover your total risk after entering the trade.

2. WHAT IS NQ?

NQ is the ticker symbol commonly used for the E-mini Nasdaq-100 futures contract.

NQ follows the Nasdaq-100 index, which is heavily influenced by large technology and growth companies.

Because of this, NQ is often associated with:

Fast price movement
Large intraday ranges
Strong reactions to economic news
Increased volatility around major technology-company earnings
Rapid changes in unrealized profit and loss

NQ CONTRACT SPECIFICATIONS

Value per full point: $20

Minimum price movement: 0.25 points

Value per tick: $5

The minimum price movement is called one tick.

NQ EXAMPLE

A trader buys one NQ contract at:

20,000.00

Price rises to:

20,001.00

Price moved:

1 point

One NQ point is worth:

$20

The trader would have approximately:

$20 profit before commissions and fees.

Now imagine price moves from:

20,000.00 → 20,010.00

That's a:

10-point movement

Calculation:

10 × $20 = $200

One NQ contract would gain approximately $200 before fees.

If that same 10-point movement went against the trader, the trader would lose approximately $200 before fees.

3. WHAT IS MNQ?

MNQ is the ticker symbol commonly used for the Micro E-mini Nasdaq-100 futures contract.

MNQ follows the same Nasdaq-100 market as NQ.

The primary difference is the monetary value of the contract.

MNQ CONTRACT SPECIFICATIONS

Value per full point: $2

Minimum price movement: 0.25 points

Value per tick: $0.50

MNQ is one-tenth the size of NQ.

This means:

10 MNQ contracts = approximately the same point exposure as 1 NQ contract

One NQ contract:

$20 per point

Ten MNQ contracts:

10 × $2 = $20 per point

MNQ EXAMPLE

A trader buys one MNQ contract at:

20,000.00

Price rises to:

20,010.00

Price moved:

10 points

Calculation:

10 × $2 = $20

The trader would gain approximately:

$20 before commissions and fees.

If the trader used five MNQ contracts:

10 × $2 × 5 = $100

The five-contract position would gain approximately:

$100 before fees.

4. WHAT IS ES?

ES is the ticker symbol commonly used for the E-mini S&P 500 futures contract.

ES follows the S&P 500 index.

The S&P 500 represents approximately 500 large publicly traded companies in the United States across multiple industries.

Compared with NQ, ES may move fewer points during certain periods. However, each ES point has a higher monetary value.

ES CONTRACT SPECIFICATIONS

Value per full point: $50

Minimum price movement: 0.25 points

Value per tick: $12.50

ES EXAMPLE

A trader buys one ES contract at:

6,000.00

Price rises to:

6,005.00

Price moved:

5 points

Calculation:

5 × $50 = $250

The trader would gain approximately:

$250 before commissions and fees.

If price moved five points against the position, the trader would lose approximately:

$250 before fees.

5. WHAT IS MES?

MES is the ticker symbol commonly used for the Micro E-mini S&P 500 futures contract.

MES follows the same S&P 500 market as ES.

The primary difference is the monetary value of the contract.

MES CONTRACT SPECIFICATIONS

Value per full point: $5

Minimum price movement: 0.25 points

Value per tick: $1.25

MES is one-tenth the size of ES.

This means:

10 MES contracts = approximately the same point exposure as 1 ES contract

One ES contract:

$50 per point

Ten MES contracts:

10 × $5 = $50 per point

MES EXAMPLE

A trader buys one MES contract at:

6,000.00

Price rises to:

6,005.00

Price moved:

5 points

Calculation:

5 × $5 = $25

The trader would gain approximately:

$25 before commissions and fees.

If the trader used four MES contracts:

5 × $5 × 4 = $100

The four-contract position would gain approximately:

$100 before fees.

6. CONTRACT VALUE REFERENCE

Contract	Market	Type	Value Per Point	Tick Size	Value Per Tick
NQ	Nasdaq-100	E-mini	$20	0.25	$5
MNQ	Nasdaq-100	Micro E-mini	$2	0.25	$0.50
ES	S&P 500	E-mini	$50	0.25	$12.50
MES	S&P 500	Micro E-mini	$5	0.25	$1.25

QUICK MEMORY

NQ = $20/point

MNQ = $2/point

ES = $50/point

MES = $5/point

7. WHAT IS A POINT?

A point is a full-number movement in the price of a futures contract.

If NQ moves from:

20,000.00 → 20,001.00

NQ moved:

1 point

If NQ moves from:

20,000.00 → 20,010.00

NQ moved:

10 points

If ES moves from:

6,000.00 → 6,005.00

ES moved:

5 points

The number of points tells you how far price moved.

It does not tell you the complete financial result.

The financial result depends on:

The contract
The number of contracts
Whether the movement was favorable or unfavorable

REMEMBER

One point is worth different amounts on different contracts.

NQ = $20/point

MNQ = $2/point

ES = $50/point

MES = $5/point

8. WHAT IS A TICK?

A tick is the smallest permitted price movement of a futures contract.

For NQ, MNQ, ES, and MES:

1 tick = 0.25 points

Price can move like this:

20,000.00

20,000.25

20,000.50

20,000.75

20,001.00

Each 0.25-point movement represents:

1 tick

Four ticks equal:

1 full point

The value of one tick depends on the contract.

TICK VALUES

NQ = $5/tick

MNQ = $0.50/tick

ES = $12.50/tick

MES = $1.25/tick

9. POINTS AND TICKS ARE NOT THE SAME

Beginners often use the terms point and tick as though they mean the same thing.

They do not.

For NQ, MNQ, ES, and MES:

1 tick = 0.25 points

4 ticks = 1 full point

EXAMPLE

NQ moves from:

20,000.00 → 20,000.25

That is:

1 tick

0.25 points

$5 on 1 NQ contract

Now imagine NQ moves from:

20,000.00 → 20,001.00

That is:

4 ticks

1 point

$20 on 1 NQ contract

The same one-point movement on one MNQ contract would be worth:

10. HOW TO CALCULATE PROFIT AND LOSS

The basic calculation is:

PRICE MOVEMENT × VALUE PER POINT × NUMBER OF CONTRACTS

You need three pieces of information:

1. How many points did price move?

2. How much is one point worth for the contract?

3. How many contracts were used?

EXAMPLE 1 — PROFITABLE MNQ TRADE

Contract: MNQ

Direction: Long

Entry: 20,000

Exit: 20,015

Movement: 15 points

Contracts: 2

MNQ value: $2 per point

Calculation:

15 × $2 × 2 = $60

Gross result:

$60 profit before commissions and fees

EXAMPLE 2 — LOSING MNQ TRADE

Contract: MNQ

Direction: Long

Entry: 20,000

Exit: 19,985

Movement against position: 15 points

Contracts: 2

Calculation:

15 × $2 × 2 = $60

Gross result:

$60 loss before commissions and fees

EXAMPLE 3 — PROFITABLE NQ TRADE

Contract: NQ

Direction: Short

Entry: 20,000

Exit: 19,975

Movement: 25 points

Contracts: 1

NQ value: $20 per point

Calculation:

25 × $20 × 1 = $500

Gross result:

$500 profit before commissions and fees

EXAMPLE 4 — LOSING NQ TRADE

Contract: NQ

Direction: Short

Entry: 20,000

Exit: 20,025

Movement against position: 25 points

Contracts: 1

Calculation:

25 × $20 × 1 = $500

Gross result:

$500 loss before commissions and fees

EXAMPLE 5 — PROFITABLE ES TRADE

Contract: ES

Direction: Long

Entry: 6,000

Exit: 6,008

Movement: 8 points

Contracts: 1

ES value: $50 per point

Calculation:

8 × $50 × 1 = $400

Gross result:

$400 profit before commissions and fees

EXAMPLE 6 — PROFITABLE MES TRADE

Contract: MES

Direction: Long

Entry: 6,000

Exit: 6,008

Movement: 8 points

Contracts: 3

MES value: $5 per point

Calculation:

8 × $5 × 3 = $120

Gross result:

$120 profit before commissions and fees

11. CONTRACT SIZE CHANGES THE ENTIRE TRADE

The number of contracts being traded is your position size.

Increasing your position size increases the monetary value of every point.

Imagine NQ moves 10 points in your favor.

1 MNQ CONTRACT

10 × $2 × 1 =

$20

5 MNQ CONTRACTS

10 × $2 × 5 =

$100

10 MNQ CONTRACTS

10 × $2 × 10 =

$200

1 NQ CONTRACT

10 × $20 × 1 =

$200

3 NQ CONTRACTS

10 × $20 × 3 =

$600

The same calculation applies when price moves against you.

A position capable of making $600 from a 10-point movement is also capable of losing $600 from a 10-point movement.

Position size does not only increase the reward. It increases the risk at the same time.

12. CONTRACT SIZE CAN AFFECT YOUR EMOTIONS

A market movement may be completely normal from a technical perspective but feel extreme when the position is too large.

Imagine price temporarily moves 10 points against a trader.

1 MNQ

10 × $2 =

$20 unrealized loss

5 MNQ

10 × $2 × 5 =

$100 unrealized loss

1 NQ

10 × $20 =

$200 unrealized loss

5 NQ

10 × $20 × 5 =

$1,000 unrealized loss

The chart movement is identical in every example.

The financial and emotional pressure is completely different.

When traders use more size than they can responsibly manage, they may begin to:

Close valid trades too early
Move their stop loss
Remove their stop loss
Take profit before the planned target
Revenge trade after a loss
Enter trades that don't meet their rules
Focus on money instead of market information

Your position size should allow you to think clearly and follow your plan.

13. MICRO CONTRACTS VS. E-MINI CONTRACTS

MNQ and MES are Micro E-mini contracts.

NQ and ES are E-mini contracts.

Micro contracts provide smaller monetary exposure per point.

This can make them useful for practicing:

Entering at a planned location
Using a stop loss
Holding through normal price movement
Following a profit target
Managing emotions
Testing a strategy with smaller exposure
Scaling into or out of a position

However:

Micro does not mean risk-free.

A trader can still create excessive risk by using too many micro contracts.

EXAMPLE

One MNQ contract:

$2 per point

Twenty MNQ contracts:

20 × $2 = $40 per point

One NQ contract:

$20 per point

Therefore:

20 MNQ contracts = $40 per point

while:

1 NQ contract = $20 per point

So 20 MNQ contracts actually create twice the point exposure of one NQ contract.

The word micro describes the individual contract.

It does not guarantee that the complete position is small.

14. ONE NQ CONTRACT VS. MULTIPLE MNQ CONTRACTS

One NQ contract creates approximately the same point exposure as:

10 MNQ contracts

However, multiple MNQ contracts provide more flexibility when managing a position.

For example, a trader enters with five MNQ contracts.

As price moves toward the target, the trader could close:

1 contract
2 contracts
3 contracts
4 contracts
All 5 contracts

This is commonly referred to as scaling out.

A trader using one NQ contract cannot partially close half of the contract.

They must either keep the contract open or close the entire contract.

This does not mean scaling out is always the best management method.

It means micro contracts can provide more flexibility when managing position size.

15. HOW TO CALCULATE TOTAL TRADE RISK

Before entering, you should know how much money you will lose if your stop loss is reached.

The basic risk calculation is:

STOP DISTANCE × VALUE PER POINT × NUMBER OF CONTRACTS

EXAMPLE 1 — MNQ RISK

Entry:

20,000

Stop loss:

19,985

Stop distance:

15 points

Contract value:

$2 per point

Contracts:

Calculation:

15 × $2 × 4 = $120

Total price risk:

$120 before commissions, fees, and possible slippage

EXAMPLE 2 — NQ RISK

Entry:

20,000

Stop loss:

19,985

Stop distance:

15 points

Contract value:

$20 per point

Contracts:

Calculation:

15 × $20 × 1 = $300

Total price risk:

$300 before commissions, fees, and possible slippage

EXAMPLE 3 — MES RISK

Entry:

6,000

Stop loss:

5,994

Stop distance:

6 points

Contract value:

$5 per point

Contracts:

Calculation:

6 × $5 × 3 = $90

Total price risk:

$90 before commissions, fees, and possible slippage

EXAMPLE 4 — ES RISK

Entry:

6,000

Stop loss:

5,994

Stop distance:

6 points

Contract value:

$50 per point

Contracts:

Calculation:

6 × $50 × 2 = $600

Total price risk:

$600 before commissions, fees, and possible slippage

16. HOW TO CALCULATE POSITION SIZE

You can use your maximum risk limit to determine how many contracts may fit the trade.

The process is:

1. Identify your planned entry.

2. Identify the correct invalidation point.

3. Calculate the stop distance.

4. Calculate the risk for one contract.

5. Determine how many contracts fit within your maximum risk.

The basic position-size calculation is:

MAXIMUM TRADE RISK ÷ RISK PER CONTRACT

EXAMPLE 1 — MNQ POSITION SIZE

Maximum trade risk:

$100

Stop distance:

10 points

MNQ value:

$2 per point

Risk for one contract:

10 × $2 =

$20

Position-size calculation:

$100 ÷ $20 =

5 contracts

Maximum position size:

5 MNQ contracts

EXAMPLE 2 — MES POSITION SIZE

Maximum trade risk:

$150

Stop distance:

10 points

MES value:

$5 per point

Risk for one contract:

10 × $5 =

$50

Position-size calculation:

$150 ÷ $50 =

3 contracts

Maximum position size:

3 MES contracts

EXAMPLE 3 — NQ POSITION SIZE

Maximum trade risk:

$300

Stop distance:

15 points

NQ value:

$20 per point

Risk for one contract:

15 × $20 =

$300

Position-size calculation:

$300 ÷ $300 =

1 contract

Maximum position size:

1 NQ contract

17. WHAT IF THE POSITION SIZE DOESN'T DIVIDE EVENLY?

The position-size calculation will not always produce a perfect whole number.

Suppose your maximum trade risk is:

$100

Your MNQ stop distance is:

15 points

Risk for one MNQ contract:

15 × $2 =

$30

Three MNQ contracts:

$30 × 3 =

$90

Four MNQ contracts:

$30 × 4 =

$120

Four contracts exceed the $100 risk limit.

Therefore, the maximum position size is:

3 MNQ contracts

When the next contract would exceed your maximum risk, round down. Never round up simply because you want more profit potential.

18. THE STOP LOSS COMES BEFORE POSITION SIZE

A trader should not select a large position first and then force the stop loss to fit the position.

The correct order is:

1. Identify where the trade idea becomes invalid.

2. Calculate the distance between the entry and invalidation point.

3. Calculate the risk for one contract.

4. Select the number of contracts that fits your risk limit.

The stop loss should be connected to the trade idea.

The position size should then be adjusted to fit the stop.

A trader should not place an unnaturally tight stop simply because the desired number of contracts creates too much financial risk.

If the correct stop creates too much risk, you have several choices:

Use fewer contracts
Use a micro contract
Wait for a better entry
Skip the trade

Skipping a trade is better than taking a position that violates your risk rules.

19. MARGIN IS NOT THE SAME AS TRADE RISK

Margin is the amount your broker or trading platform requires to open and maintain a position.

Trade risk is the amount you may lose based on:

Entry
Stop loss
Contract value
Number of contracts

A platform may allow you to open a position that is much larger than you can responsibly manage.

The fact that the order is accepted does not mean the risk is appropriate.

EXAMPLE

Suppose a platform allows a trader to open two NQ contracts.

The planned stop is:

20 points

Trade risk:

20 × $20 × 2 =

$800

The important question isn't only:

"Will the platform allow me to enter?"

The more important question is:

"Does an $800 loss fit my risk plan?"

Margin determines whether a position can be opened.

Your risk plan determines whether the position should be opened.

20. COMMISSIONS AND FEES

The calculations in this lesson show gross profit and loss.

Gross profit or loss is the result before trading costs.

Net profit or loss is the result after trading costs.

Trading costs may include:

Broker commissions
Exchange fees
Regulatory fees
Platform fees
Market-data fees
Other applicable trading costs

A trade showing a $100 gross profit may produce less than $100 in net profit after costs.

A losing trade may also cost slightly more than the calculated price loss after commissions and fees are included.

Always understand the current fee structure associated with your broker and trading platform.

21. WHAT IS SLIPPAGE?

Slippage occurs when an order is filled at a different price than expected.

For example, a trader places a stop order expecting to exit at:

20,000

During fast market movement, the order fills at:

19,998

The trader experienced:

2 points of slippage

Slippage can occur during:

Major economic announcements
Rapid price movement
Low-liquidity conditions
Market openings
Unexpected news
Large price gaps

A stop loss helps control risk, but it does not guarantee an exact fill price during every market condition.

Actual losses can occasionally be larger than the original risk calculation because of slippage.

22. NQ AND ES DO NOT ALWAYS MOVE THE SAME WAY

NQ and ES are both index futures markets, but they track different indexes.

NQ → Nasdaq-100

ES → S&P 500

Because the indexes contain different companies and weightings, they do not always move identically.

NQ is more heavily influenced by large technology and growth companies.

ES represents a broader collection of industries.

Sometimes NQ and ES will move in the same direction.

Other times, one market may display more strength or weakness than the other.

A setup appearing on NQ is not automatically valid on ES.

Each market must be analyzed based on its own price action and context.

23. WHY BEGINNERS OFTEN START WITH MNQ OR MES

Micro contracts allow traders to experience real market movement with less dollar exposure per point.

They can help traders practice:

Following a trading plan
Entering only when rules are met
Using a logical stop loss
Accepting a controlled loss
Holding toward a planned target
Managing emotional reactions
Recording accurate trading data
Respecting a daily loss limit

A trader should earn the right to increase size through consistent execution.

Increasing size should come after demonstrating the ability to:

Follow rules consistently
Accept losses without revenge trading
Avoid unnecessary trades
Keep accurate records
Use proper stop losses
Remain disciplined across a meaningful number of trades

Larger contracts should not be used simply because smaller profits feel boring.

COMMON BEGINNER MISTAKE

"I want to make $500 today, so I need to use one NQ contract."

This thinking begins with the desired financial result instead of the quality of the trade.

The amount you want to make does not determine:

Whether a valid setup will appear
How far the correct stop should be
How much the market will move
Whether the trade will win

A disciplined trader asks:

Is there a valid setup?

Where is the entry?

Where does the idea become invalid?

How far away is the stop?

How much am I allowed to risk?

Which contract and position size fit that risk?

The contract should be selected based on the trade and risk plan, not the amount of money you want to make.

PRACTICAL EXAMPLE

Imagine a trader identifies a possible long trade on NQ.

Entry:

20,000

Stop loss:

19,985

Profit target:

20,030

Maximum risk:

$300

STEP 1 — CALCULATE STOP DISTANCE

20,000 − 19,985 =

15 points

STEP 2 — CALCULATE RISK FOR ONE NQ CONTRACT

15 × $20 =

$300

STEP 3 — DETERMINE NQ POSITION SIZE

Maximum risk:

$300

Risk for one NQ contract:

$300

Maximum position size:

1 NQ contract

STEP 4 — CALCULATE POTENTIAL REWARD

20,030 − 20,000 =

30 points

30 × $20 =

$600

STEP 5 — CALCULATE RISK-TO-REWARD

Risk:

$300

Potential reward:

$600

$600 ÷ $300 =

Therefore:

1:2 RISK-TO-REWARD

The trader is risking $300 for a potential $600.

This does not mean the trade will win.

It means the trade has defined risk and defined potential reward before entry.

MNQ ALTERNATIVE

The same trade could be taken using MNQ.

Stop:

15 points

Risk for one MNQ:

15 × $2 =

$30

To risk approximately $300:

$300 ÷ $30 =

10 MNQ contracts

Ten MNQ contracts create approximately the same point exposure as one NQ contract.

However, the trader is not required to use the full $300 risk allowance.

The trader could use fewer MNQ contracts to reduce total risk.

Your maximum risk is a limit, not a target.

KNOWLEDGE CHECK

QUESTION 1

How much is one full point worth on one NQ contract?

A. $2
B. $5
C. $20
D. $50

Answer: C

QUESTION 2

How much is one full point worth on one MNQ contract?

A. $0.50
B. $2
C. $5
D. $20

Answer: B

QUESTION 3

How much is one full point worth on one ES contract?

A. $5
B. $12.50
C. $20
D. $50

Answer: D

QUESTION 4

How much is one full point worth on one MES contract?

A. $1.25
B. $2
C. $5
D. $50

Answer: C

QUESTION 5

How many ticks equal one full point on NQ, MNQ, ES, and MES?

A. 2
B. 4
C. 5
D. 10

Answer: B

QUESTION 6

How much is one tick worth on one NQ contract?

A. $0.50
B. $1.25
C. $5
D. $20

Answer: C

QUESTION 7

How much is one tick worth on one ES contract?

A. $5
B. $10
C. $12.50
D. $50

Answer: C

QUESTION 8

A trader uses three MNQ contracts and captures a 10-point movement. What is the gross result?

A. $20
B. $30
C. $60
D. $600

Answer: C

QUESTION 9

A trader uses one NQ contract with a 15-point stop. What is the approximate price risk?

A. $30
B. $75
C. $150
D. $300

Answer: D

QUESTION 10

Which statement is correct?

A. Micro contracts cannot produce large losses.

B. Position size should be selected based on the desired profit.

C. The stop distance and contract value should be calculated before entering.

D. Margin represents the maximum amount a trader can lose.

Answer: C

QUESTION 11

A trader uses two MES contracts with an 8-point stop. How much is the approximate price risk?

A. $40
B. $80
C. $100
D. $800

Answer: B

QUESTION 12

A trader has a maximum risk of $100. One contract would risk $30. What is the maximum number of contracts that stays within the limit?

A. 2
B. 3
C. 4
D. 5

Answer: B

LESSON ASSIGNMENT

PART 1 — CONTRACT VALUES

Write the value per point and value per tick for each contract.

NQ

Value per point:

Value per tick:

MNQ

Value per point:

Value per tick:

ES

Value per point:

Value per tick:

MES

Value per point:

Value per tick:

PART 2 — PROFIT & LOSS CALCULATIONS

SCENARIO A

Contract: MNQ

Number of contracts: 4

Movement in your favor: 18 points

Calculate the gross profit.

Answer:

18 × $2 × 4 = $144 profit before fees

SCENARIO B

Contract: NQ

Number of contracts: 2

Movement against the position: 12 points

Calculate the gross loss.

Answer:

12 × $20 × 2 = $480 loss before fees

SCENARIO C

Contract: MES

Number of contracts: 5

Movement in your favor: 7 points

Calculate the gross profit.

Answer:

7 × $5 × 5 = $175 profit before fees

SCENARIO D

Contract: ES

Number of contracts: 1

Movement against the position: 6 points

Calculate the gross loss.

Answer:

6 × $50 × 1 = $300 loss before fees

PART 3 — RISK CALCULATIONS

SCENARIO E

Contract: MNQ

Entry: 20,000

Stop loss: 19,982

Number of contracts: 3

Calculate:

Stop distance
Risk for one contract
Total trade risk

Answer:

Stop distance:

20,000 − 19,982 = 18 points

Risk for one contract:

18 × $2 = $36

Total trade risk:

$36 × 3 = $108 before fees and possible slippage

SCENARIO F

Contract: MES

Entry: 6,000

Stop loss: 5,992

Number of contracts: 4

Calculate:

Stop distance
Risk for one contract
Total trade risk

Answer:

Stop distance:

6,000 − 5,992 = 8 points

Risk for one contract:

8 × $5 = $40

Total trade risk:

$40 × 4 = $160 before fees and possible slippage

PART 4 — POSITION SIZE CALCULATIONS

SCENARIO G

Maximum trade risk:

$120

Contract:

MNQ

Stop distance:

15 points

Calculate the maximum number of contracts that stays within the risk limit.

Answer:

Risk for one MNQ contract:

15 × $2 = $30

Position size:

$120 ÷ $30 = 4

Maximum position size:

4 MNQ contracts

SCENARIO H

Maximum trade risk:

$200

Contract:

MES

Stop distance:

12 points

Calculate the maximum number of contracts that stays within the risk limit.

Answer:

Risk for one MES contract:

12 × $5 = $60

Three MES contracts:

$60 × 3 = $180

Four MES contracts:

$60 × 4 = $240

Four contracts exceed the $200 risk limit.

Maximum position size:

3 MES contracts

KEY TAKEAWAYS

NQ and MNQ follow the Nasdaq-100 futures market.
ES and MES follow the S&P 500 futures market.
NQ is worth $20 per point and $5 per tick.
MNQ is worth $2 per point and $0.50 per tick.
ES is worth $50 per point and $12.50 per tick.
MES is worth $5 per point and $1.25 per tick.
Four ticks equal one full point on all four contracts.
Position size changes both profit potential and loss exposure.
Micro contracts provide smaller exposure per contract but can still create significant losses when too many contracts are used.
The stop distance should be based on where the trade idea becomes invalid.
Position size should be adjusted to fit the stop and maximum risk limit.
Margin determines whether a position can be opened, but it does not determine whether the position is responsible.
Profit, loss, and total risk should be calculated before entering a trade.

FINAL LESSON REMINDER

Knowing how much a contract is worth does not tell you when to buy or sell.

It tells you how much money is at risk when you make that decision.

Before entering any trade, you should be able to answer:

Which contract am I trading?

How many contracts am I using?

How much is one point worth?

How much is one tick worth?

How far away is my stop loss?

How much will I lose if the stop is reached?

How much could I make if the target is reached?

Does this position fit my risk plan?

If you cannot answer those questions before entering, you are not ready to place the trade.

In Lesson 3, you will learn how futures trading sessions work, why market behavior changes throughout the day, and why the time you choose to trade matters.

EDUCATIONAL DISCLAIMER

Tick Lab is provided for educational and informational purposes only. Nothing in this lesson should be interpreted as financial advice, investment advice, or a guarantee of trading results.

Futures trading involves substantial risk and may not be suitable for everyone. Contract specifications, commissions, margin requirements, and trading rules should always be confirmed through your broker, trading platform, and the relevant exchange before placing a trade.