Top

Bottom

Product Moves on Exchanges (understanding ticks) (CME, USA)

Traders will want to know three key facts pertaining to calculating profit for each contract they trade.

Notional Value

Along with calculating price per tick and/or dollar value, all futures contract also have what is called a notional value. This is the value of the commodity that you can control in the market.

For example, the CL contract is based on 1,000 barrels of oil. This means that the notional value of the contract is the price of the contract multiplied by 1,000. If crude is trading at $70, the trader will have control over$70,000 in the market place.

Because you are controlling a larger amount of capital than the cash you have invested, a trader should understand how much the gains or losses will be magnified.

END OF MY NOTES

Updation History
First updated on 12th October 2020.