Futures contract specification

What the futures contract specification contains

This lesson shows how to read a futures contract specification field by field and how to turn it into numbers with which you calculate risk: tick value in PLN (Polish złoty), stop distance, and allowable number of contracts. It is for the reader who already knows what futures is and wants to move from the general description to a specific instrument they intend to trade.

The specification is a document published by the exchange, supplemented by a table of deposits and costs from your broker. It resolves everything that cannot be determined from the chart: how much underlying one contract covers, by how much the price can minimally change, and when the contract ceases to exist. Without this document, the chart remains a picture. Before you start reading its fields, however, confirm what the contract obligates you to do and who settles it — described in the lesson What is futures.

How to read the specification field by field

The table is a checklist, not a shortcut. Each row corresponds to one field of the document and one question you must know the answer to before entering. Check with your broker for numerical values — the exchange defines the standard contract, but deposit and commission belong to the account provider.

From specification to money — formulas and protocol

Order is part of the method. First contract size and tick, then tick value in the pricing currency, then conversion to PLN, and finally the number of contracts and the cost of entry itself.

point_value       = amount per one price point — from the instrument card
tick_value        = tick_size × point_value        (in pricing currency)
tick_value_PLN    = tick_value × FX_rate
ticks_to_stop     = distance_to_stop / tick_size
risk_PLN          = ticks_to_stop × tick_value_PLN × number_of_contracts
round_trip_cost_PLN = (spread_in_ticks × tick_value_PLN + commission_PLN) × number_of_contracts
round_trip_in_R   = round_trip_cost_PLN / 1R_PLN

Count commission as a full round turn, i.e. opening and closing together, and take the spread in ticks from the session in which you actually trade. Tick value without costs inflates the plan’s result — especially with micro-contracts and a tight stop. More on this difference: round-trip cost and spread.

1. Record the contract and series. Instrument code, month, and quote source. Choose the series by liquidity, not by the date in the name.
2. Copy the contract size and pricing unit. These are the ones that decide whether a price point is worth the same on two different contracts.
3. Copy tick size and point value, then calculate tick value using the formula above. If the instrument card lists tick value directly, use the given number and check whether it matches your account.
4. Calculate ticks to stop. Stop distance from the plan divided by tick size. Round down — because only full ticks are executable.
5. Calculate risk in the contract currency and in PLN. Take the exchange rate from the account, not from an information service, because that is the rate at which the broker will settle the result.
6. Calculate the number of contracts: number_of_contracts = floor(1R_PLN / risk_per_contract_PLN). Rounding down is mandatory. If the result is zero, the correct answer is not a wider stop, but a smaller instrument or no entry.
7. Calculate entry and exit cost using the round-trip cost formula and compare it with 1R. This fraction is the only honest measure of whether the position size makes sense on the chosen contract.
8. Record the read with date and source. The instrument card may be outdated after a few weeks; a record without a date ceases to be evidence.

The reference point for steps 6 and 7 remains the percentage risk rule, illustrated with the 1–2% rule.

Example calculation on illustrative numbers

All values below are illustrative numbers — chosen to make the calculation readable. They are not the quote of any real instrument or the table of any broker. Copy your own numbers from the instrument card and the table of your provider.

tick_size      = 0.25 point          (illustrative)
point_value    = 20 USD              (illustrative)
tick_value     = 0.25 × 20 = 5 USD  (illustrative)
FX_rate        = 4.00 PLN/USD        (illustrative)
tick_value_PLN = 5 × 4.00 = 20 PLN

stop_distance  = 20 ticks
risk_per_contract = 20 × 20 PLN = 400 PLN

demo_capital   = 40,000 PLN  →  1% = 400 PLN
number_of_contracts = floor(400 / 400) = 1

With a capital of 20,000 PLN, the same calculation gives zero contracts, because 1% is 200 PLN. That is not an error in the formula; it is its most important function: it plainly states that with this stop and this instrument, the entry does not fit the risk rule. The solution is a smaller contract or a tighter stop from the plan — never relaxing the rule.

Add the full round-turn cost to this. With a spread equal to one tick and a commission of 16 PLN per round turn on one contract (both illustrative figures), the cost is 20 + 16 = 36 PLN, i.e. 0.09R. This fraction grows when you tighten the stop: the tighter the stop, the larger the cost share in the risk unit.

Specification card — fill it in yourself

Fill in one column per contract. The source and date column is mandatory, because without it you do not know whether you are comparing current data.

The first table describes the instrument, the second — your accounts. Keep them together: when you return to the result after a month, you will see whether the contract changed, or only the exchange rate and the capital size.

When the specification says “do not trade”

1. You are missing any row from the field table. A position opened on a contract without known size and expiry date is a bet on something you did not define.
2. The tick value in PLN changes on the second read. That signals that the data comes from different sources or different series. Set one instrument card and stick to it.
3. The number of contracts comes out zero with the stop from the plan. Zero is the correct answer. A wider stop to “make it fit” is changing the plan to suit the instrument — exactly the reverse order.
4. The full round-turn cost exceeds the budget recorded in R. If spread and commission eat up a significant part of the risk unit, this contract is not suitable for this horizon or this entry frequency.

Common mistakes when reading specifications

• Memorising tick value from the lesson as a market fact. Values are specific to the contract and broker, and after a change in conditions they must be read again.
• Skipping the settlement section. The difference between cash settlement and physical delivery has real consequences when holding the position to expiry.
• Ignoring the expiration cycle on strategies longer than one series. The natural follow-up: rolling contracts.
• Calculating risk without costs. Tick value alone, without commission and spread, inflates the plan’s quality: the strategy looks profitable even where costs already eat the result.
• Taking session hours from memory. Time zone and daylight saving changes twice a year shift the liquidity window, and with it the spread.
• Confusing deposit with maximum loss. Required margin changes with market conditions; its level does not set your risk limit.

What is next

With the instrument card in hand, move to margin on futures, where the deposit becomes a number in the account. Then term structure explains why successive series have different prices, and roll shows how to move the position without paying for haste. If you are hesitating between products, return to the lesson CFD or futures.

There is still one comparison left: the futures specification against the CFD instrument table. Placing both documents side by side shows what you are paying for in each.

Measurable exercise

This exercise turns the specification of one contract into numbers that can be matched with capital: tick value in PLN, the number of ticks fitting into the stop distance, the risk of one contract, and the spread cost expressed in R. Record each measurement in a separate row, and repeat the tick value read after one session.

1. Copy four fields from the instrument card: tick size, point value, pricing currency, and commission for a full round turn. Record the source and read date.
2. Calculate the tick value in PLN according to the formula from the lesson and compare the result with the number given directly in the instrument card.
3. Determine the stop distance in ticks for the setup from the plan, then calculate ticks per 1R and spread cost in R.
4. Repeat the read after one session and compare the values in both measurements. A discrepancy means the source needs to be replaced.

Specification worksheet — fill it in yourself

The “Repeated measurement” column serves one purpose: if tick value or spread do not reproduce on the second read, the entry goes back to the instrument card instead of into the risk account.

Common questions

What is the difference between tick size and tick value?

Tick size is the minimum price step, expressed in pricing units. Tick value is the amount that step represents in the contract currency. For risk calculation, you need the value, but you calculate it from tick size and point value.

Is the required deposit from the exchange card the maximum loss?

No. The deposit is collateral that the account holds. The position result can exceed the initial deposit during a strong move, depending on the market and broker rules. Therefore, position size is counted from risk per position, not from the deposit amount.

How do I convert session hours to Polish time?

Take the official schedule from the instrument card, establish the exchange's time zone, and account for daylight saving time on both sides. Record the result in the Europe/Warsaw zone in your playbook and update it twice a year, when the time changes.

Why convert specification into numbers instead of trading 'by points'?

Because a chart point is not a risk unit. The same stop distance on two contracts means different amounts, and the same amount at two exchange rates gives a different account load. Only conversion to PLN lets you compare the risk of a single position with capital, and round-turn cost with the risk unit. Without this step, you cannot distinguish a contract that fits your plan from one that fit only by accident. The specification also answers questions the chart does not resolve: when the position expires, whether settlement is cash, and at what time the market actually accepts orders. All numerical values are specific to the contract and the broker, so confirm them in the current instrument card before your first entry.