How are points calculated in the stock market

In this article we will explain how to calculate price moves when trading stock market indices.

A tick is defined as the smallest price movement of an instrument, in other words the minimum increment in which the price can change. Each index will have its own way of moving.

Below is a list of the major stock indices and the increments i.

However in the case of the Dow Jones if it moves from 14, A point is a price movement that occurs when we see the number BEFORE the decimal point change up or down by one. In our Dow Jones example above we said it moved from 14, We called this movement a tick but it can also be called a point.

They are the same thing in this case. In our table from earlier we can see that each index has its own currency.

Obviously the American indices use the US Dollar, the FTSE uses the British Pound, the European indices use the Euro and the Nikkei uses the Yen. The minimum trade size for each stock index is 1 index.

So if we believe the Dow is going to increase in value and we want to open the minimum size then:.

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So every time the Dow moves one tick or one point we will gain or lose a US dollar. Say this time we wanted to short sell 5 FTSE indexes. Our calculation will be as follows:.

So every time the FTSE moves 0. So say the FTSE moved from 6, Of course if we have a Euro or US Dollar platform our profit is converted at the current exchange rates and that is what we would see in our account. So in this case every time the Nikkei moves a tick 5. Some indices will have a minimum trade size based on their value. For example the Nikkei has a minimum trade size of indexes as the value of the Nikkei is measured in Yen and if we were to buy just 1 index it would be too small a trade.

For the other indices we mentioned the minimum trade size is just 1 index.

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Economic Calendar Trading Platforms Calculators. How to Calculate Price Moves when Trading Stock Market Indices. The Dow Jones futures only move in points as the figure is so large. So to calculate the value of a tick move we simply multiply our position size by one tick: So if we believe the Dow is going to increase in value and we want to open the minimum size then: Our calculation will be as follows: I added a video to a YouTube playlist https: AutoChartist Report Forex Eur How does US employment affect your portfolio June 19, Trading Basics Forex Commodities Stock Indices.

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