Module 9 · Lesson 11 of 12 · Futures · About 5 minutes
Micro vs Standard Futures Contracts: Same Market, Different Size
On this page
Before you read: Sizing Futures Positions in Contracts: Ticks, Tick Value and Whole Numbers
What you will learn
- How micro contracts and standard contracts on the same index differ in multiplier and notional value.
- Why the price chart is nearly the same while the dollar amounts are not.
- How costs, liquidity and margin compare across sizes, in general terms.
What changes between sizes?
If two contracts track the same index, what makes one smaller?
Many equity index and some commodity futures are listed in more than one size. A smaller contract usually uses the same price and tick size but a smaller multiplier, often one-tenth of the standard. In a fictional pair where the standard contract’s multiplier is $50 per point and the micro’s is $5, an index at 5,000 gives a notional value of $250,000 for the standard and $25,000 for the micro. A 10-point move changes the value by $500 or $50 per contract.
Contract size diagram
Illustrative diagram constructed for teaching. Not real market data.
The diagram shows two fictional contracts side by side at an index level of 5,000: multipliers of $50 and $5, notional values of $250,000 and $25,000, and a 10-point move worth $500 and $50. The same price line is drawn above both. All values are made up and are not real contract terms.
What stays the same?
Would the charts of the two contracts look different?
Because both track the same index with the same tick size, their price charts are nearly identical. Small differences can appear in the order book and in the last traded price at any moment. The percentage move is the same, so the leverage relative to notional value depends on the margin required, not on the contract size.
How do costs and liquidity compare?
If fees are charged per contract, which size pays more per dollar of exposure?
Commissions and exchange fees are charged per contract. Ten micros usually cost more in commissions and fees than one standard contract with the same exposure, because those charges are per contract and do not shrink by ten. Compare your broker’s per-contract total for both before trading. Fees are therefore a larger share of each dollar at risk. Each size trades in its own order book, so volume, depth and spread can differ between them, especially outside regular hours. The exchange’s volume data shows how active each contract is.
Why do smaller sizes exist?
How fine can a position be adjusted with only one large size available?
Smaller sizes let users match exposure more closely to what they intend, in steps one-tenth as large. They lower the dollar amount of each tick, which changes the arithmetic covered in the contract-sizing lesson. They do not change the market’s behavior or make trading safer: a loss of the same percentage is the same percentage at any size.
What this does not tell you about contract sizes
- Real multipliers, tick values or margins. Check the exchange’s and your broker’s specifications.
- Which size suits anyone.
- Whether costs will be higher or lower for a given broker.
- Nothing here suggests buying, selling or holding any contract.
Method in Practice: the same plan sized both ways
Fictional example. John, Harbor Index futures, the prices, times, costs and results are all invented for teaching. This shows how a written plan can be built and tested. It is not a recommendation, and nothing here says how often this idea works.
Try it on a real chart. Test this idea yourself on past sessions with bar replay. Keep your own count, including the days with no trade.
The idea. One micro contract is one-tenth the size of a standard one, but costs don't always scale the same way (this lesson). John runs his plan from Volume Profile Explained: POC, Value Area, HVN, LVN two ways with the same exposure: 2 standard contracts, or 20 micros.
Three outcomes (the Volume Profile Explained: POC, Value Area, HVN, LVN lesson's replays)
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Replay A: standard +$75, micros +$65. The micros paid $20 in commissions instead of $10
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Replay B: standard −$104, micros −$114
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Replay C: $0 either way
Show the workings
| 2 standard ($100/point, $5 each) | 20 micros ($10/point, $1 each) | |
|---|---|---|
| Replay A | +$25 + $60 − $10 = +$75 | 10 × 0.25 × $10 + 10 × 0.60 × $10 − $20 = +$65 |
| Replay B | 2 × −0.47 × $100 − $10 = −$104 | 20 × −0.47 × $10 − $20 = −$114 |
| Replay C | $0 | $0 |
Test it yourself
- Work out the same plan both ways with your real contract specifications and fees.
- Compare the total costs over a month of your trades.
- Use micros for finer sizing only where it fits your cap better.
Where it breaks
- Real fees, margin and liquidity differ between standard and micro contracts.
- Equal exposure doesn't mean equal costs.
- Specifications here are fictional.
Reflection question: At your size, which contract costs you less in total, and have you worked it out?
Check yourself
- A fictional micro contract has a $2 multiplier. What is its notional value at an index level of 18,000? Hint: price × multiplier.
- Why do the two charts look nearly the same? Hint: same index, same tick size.
- Why can fees take a larger share of the risk with micro contracts? Hint: fees per contract.
Reflect on your own process
- Does your written plan record total fees per dollar of exposure when you compare contract sizes?
- How would you check a contract's volume and spread before noting it in your plan?
- Which number does your journal use to describe position size: contracts, notional value, or both?
- At your size, which contract costs you less in total, and have you worked it out?