Tick size
Tick size is the smallest increment an instrument's price is allowed to move — the grid on which every quote, order, and fill has to sit.
Each tick carries a fixed dollar worth per contract, the tick value, set by the exchange. On the E-mini S&P 500 (ES) the tick size is 0.25 index points and the tick value is $12.50 per contract; on the Micro E-mini (MES) the same 0.25-point tick is worth $1.25. Forex has its own version of the idea: the pip, subdivided into tenths on five-digit quotes.
Tick size is the unit trading is actually denominated in. Stops and targets are measured in ticks, the spread and slippage are quoted in ticks, and multiplying by tick value is what turns a chart distance into money — the first step of any position-sizing calculation in futures, playing the role lot size and pip value play in forex.
Example
An 8-tick stop on ES risks 8 × $12.50 = $100 per contract. On a $100,000 account risking 0.5% per trade ($500), that allows 5 contracts. The identical setup traded in MES risks 8 × $1.25 = $10 per contract, so the same $500 budget supports 50 micro contracts — finer granularity, useful when the stop or the account changes size.
In a prop-firm challenge
Futures evaluations state everything in ticks, and the most common sizing mistake is applying the wrong tick value — an ES calculation executed in a different contract multiplies risk by the wrong constant. Tick arithmetic also frames the rules: with a $2,000 daily loss limit, a 5-contract ES position is 160 ticks of adverse movement from ending the day, but a 10-contract position only 80. Knowing the day's budget in ticks, per position, before entering is basic challenge hygiene.