ADVANCED TRADING

Complete Futures Trading Guide: Contracts & Risk

Q: What are the prerequisites for futures trading?

Minimum requirements: 1+ year profitable trading experience, $10,000+ risk capital, understanding of leverage and margin, and experience with volatile instruments. Futures are NOT for beginners.

Q: How much leverage do futures offer?

Futures typically offer 20:1 to 100:1 leverage. This means small price moves create massive gains or losses. A 1% move against you can wipe out your entire position.

Q: What happens if I hold a futures contract to expiration?

It depends on settlement type: Index futures (ES, MES, NQ, YM) are cash-settled—no physical delivery. Commodity futures (oil, gold, agricultural) are physically settled—you must accept/make delivery (like 1,000 barrels of oil!) if held past First Notice Day. Most traders roll or close positions 1-2 weeks before expiration.

Q: What's the difference between futures margin and stock margin?

Futures margin is a performance bond (good faith deposit), not borrowed money. It's typically 3-15% of contract value but can change rapidly during volatile periods.

Master futures trading with leverage, margin requirements, and contract specs. Advanced traders only—high risk, high reward.

Advanced Level

High Leverage

Experience Required

Start Learning View Examples

Explore below

What Are Futures Contracts?

A futures contract is an agreement to buy or sell an asset at a predetermined price on a specific date in the future. Think of it as a binding "IOU" between two parties.

Simple Example: Corn Futures

The Contract: Buy 5,000 bushels of corn in December for $4.50/bushel

Today's Date: September

Contract Value: 5,000 × $4.50 = $22,500

What Happens: In December, you must buy the corn at $4.50 regardless of market price

Why Futures Exist

Price Lock

Producers and consumers can lock in prices months ahead

Price Discovery

Markets determine fair future prices based on supply/demand

Speculation

Traders can profit from price movements without owning the asset

Types of Futures Markets

Futures are available for almost every major asset class, each with unique characteristics.

Agricultural Commodities

Corn (C): 5,000 bushels

Wheat (W): 5,000 bushels

Soybeans (S): 5,000 bushels

Complexity:

Energy Futures

Crude Oil (CL): 1,000 barrels

Natural Gas (NG): 10,000 MMBtu

Gasoline (RB): 42,000 gallons

Complexity:

Recommended

Financial Futures

Micro E-mini S&P (MES): $5 per point

E-mini S&P 500 (ES): $50 per point

E-mini Nasdaq (NQ): $20 per point

Complexity: (Start Here)

Metals Futures

Gold (GC): 100 troy ounces

Silver (SI): 5,000 troy ounces

Copper (HG): 25,000 lbs

Complexity:

Understanding Futures Margins

Futures use margin differently than stocks. You're not borrowing money - you're posting a "good faith deposit" to enter the contract.

Initial Margin

Deposit required to open a position (typically 3-12%).

Ex: ES contract ($250k) needs ~$13k margin

Maintenance Margin

Minimum balance to keep position open (~90% of initial).

Ex: If initial is $13k, maintenance is ~$11.7k

Mark-to-Market

P&L is settled to cash daily. Losses are debited immediately.

Critical: Can wipe accounts fast

The Margin Call Process

Position Goes Against You

Account balance drops below maintenance margin.

Margin Call Issued

Broker demands funds to restore initial margin immediately.

Forced Liquidation

If you don't fund, broker closes position at market price (usually a bad price).

Leverage: The Double-Edged Sword

E-mini S&P 500 Leverage Example

Contract Value $250,000

Initial Margin ~$13,000

Leverage ~19:1

Market Moves UP 1%

Contract gains: $2,500

Return on Margin: +19.2%

Market Moves DOWN 1%

Contract loses: $2,500

Loss on Margin: -19.2%

Rapid Depletion

A 5% adverse move can wipe out your entire margin deposit.

Emotional Stress

Massive P&L swings lead to panic selling and poor decisions.

Gap Risk

Prices can "gap" past your stop loss overnight, increasing losses.

Beginner's Futures Checklist

Understand leverage and margin requirements completely Start with micro contracts (MES, MNQ) to learn Paper trade for at least 50 transactions Have 3-5x margin requirement as account buffer

Popular Futures Contracts

Complete specifications for the most traded futures contracts

Contract	Symbol	Size	Tick Size	Margin (Est.)	Hours (ET)
Micro E-mini S&P Great for Beginners	MES	$5 × Index	0.25 ($1.25)	~$1,300*	Sun 6PM - Fri 5PM
E-mini S&P 500 Standard Contract	ES	$50 × Index	0.25 ($12.50)	~$13,000*	Sun 6PM - Fri 5PM
E-mini Nasdaq High Volatility	NQ	$20 × Index	0.25 ($5.00)	~$17,000*	Sun 6PM - Fri 5PM
Gold Commodity	GC	100 oz	0.10 ($10)	~$8,000*	Sun 6PM - Fri 5PM

* Margins are approximate and change with volatility. Verify with your broker.

Global Futures Trading Sessions

🌏 Asian Session

6:00 PM - 3:00 AM ET

Active Markets:

Nikkei 225 (NKD)
Hang Seng (HSI)
Gold (Asian Hours)

🇪🇺 European Session

3:00 AM - 11:30 AM ET

Active Markets:

Euro Stoxx 50
FTSE 100
Brent Crude

🇺🇸 US Session

9:30 AM - 4:00 PM ET

Active Markets:

E-mini S&P 500
Nasdaq 100
Crude Oil

Frequently Asked Questions

Everything you need to know about this tool

What are the prerequisites for futures trading?

How much leverage do futures offer?

What happens if I hold a futures contract to expiration?

What's the difference between futures margin and stock margin?

Need More Help?

Still have questions?

Contact Support

Ready for Advanced Futures Trading?

If you meet the prerequisites and understand the extreme risks, enhance your futures trading with our AI-powered Infinity Algo for better market timing.

Get Infinity Algo for TradingView More Trading Guides