Points
Points are a common way to measure price movement in indices and many CFD products. They're a human-friendly unit that makes P&L calculations straightforward.
The key is understanding your £/€/$ value per point.
Points are simple. The key is understanding your £/€/$ value per point.
What Is a Point in Trading?
A point is a single unit move in the quoted price. For markets that trade at whole-number levels, points are intuitive:
- If an index moves from 7,000 to 7,010, that's 10 points.
- If a share price moves from £100 to £102, that's 2 points (sometimes traders say "£2 move").
⚠️ Important Detail
"Point" is a human-friendly unit. Your platform may also use ticks (the minimum price increment) underneath. In some markets, 1 point equals multiple ticks, depending on the instrument's tick size.
Where Are Points Used?
- Indices: FTSE 100, DAX, S&P 500, NASDAQ 100, etc.
- Index CFDs / spread betting: often quoted as "£ per point".
- Some commodities and futures: traders may talk in points depending on market convention.
- Some crypto markets: traders often refer to points as "$ moves" (e.g., BTC up $500).
Forex tends to use pips, while exchange-traded futures often emphasise ticks.
Points and Profit/Loss
Points become meaningful when you attach a value per point (stake size or contract value). The basic idea:
| Concept | Meaning | Simple formula |
|---|---|---|
| Points moved | How far price moved | Exit price − entry price (in points) |
| £/point (stake) | Your value per point | Set in the ticket (e.g., £2/pt) |
| P&L | Money gained/lost | P&L = points × £ per point |
💡 Quick Example
If you trade an index at £2 per point and it moves 20 points in your favour: 20 × £2 = £40 profit (before costs).
⚠️ Costs Still Apply
Spread, commissions, financing (overnight), and slippage can all reduce your realised profit. Always factor them in when planning targets and stops.
Examples: Points in Practice
Example 1: Index Move
The DAX moves from 17,000 to 17,125 → 125 points.
Example 2: Stop Distance
You buy at 7,500 and place your stop at 7,460 → your risk distance is 40 points.
Example 3: P&L
You trade at £1 per point and the market moves 40 points against you → £40 loss (before costs).
Points vs Pips vs Ticks
These are all measurement concepts — used in different markets:
- Pips: mainly forex (standardised decimal movement).
- Points: commonly indices and some CFDs (whole-unit movement).
- Ticks: the minimum price increment on an exchange instrument (futures, many shares).
In practice, your platform may display all of these depending on instrument type. The goal is consistency: measure distance in the unit your instrument uses.
Common Mistakes
- Not knowing the £/point value: risk becomes guesswork.
Fix: always check the stake size or contract value per point in the ticket. - Ignoring spread in points: spreads are a real cost.
Fix: include spread when calculating stop distance and targets. - Confusing points with ticks: tick size can be smaller than 1 point.
Fix: confirm the instrument's tick size and how your platform quotes it.
✅ Quick Checkpoint
Try answering before expanding the model answers.
1) If an index moves from 7,000 to 7,015, how many points is that?
15 points.
2) If you trade at £3 per point and the market moves 10 points in your favour, what is your profit (before costs)?
10 × £3 = £30.
3) What should you always confirm before trading points-based markets?
Your £/point value (stake/contract size) and typical spread/fees for that instrument.
Next lesson: Ticks.
Frequently Asked Questions: Points
Do all indices move in 1-point increments?
Not always. Some indices trade in smaller increments (ticks) such as 0.5 or 0.1, depending on the product and venue. Platforms may still describe movement in "points" for simplicity.
Are points the same on futures and CFDs?
The concept (price movement unit) is similar, but the contract value and tick size can differ. Always check the instrument specification on your platform.
Why do spread betting providers quote "£ per point"?
Because your profit/loss is calculated as points moved multiplied by your stake per point, making P&L easy to understand.
Can points be used in forex?
Some traders casually say "points" in forex, but the standard unit is the pip. To avoid confusion, stick with pips and pipettes for FX.
Summary
Points are a common way to measure price movement in indices and many CFD products. Your profit/loss is driven by points moved multiplied by your value per point.
Next lesson: Ticks.