# Futures Trading

> How futures trading works day to day: choosing contracts, margin, tick values, trading hours, rolling, costs and risk, with a worked Micro E-mini trade.

Source: https://learn.tradelabsai.com/markets/futures-trading/  
Track: Markets and Instruments · Level: Beginner · Updated: 2026-10-03  
Publisher: TradeLabs AI (https://tradelabsai.com). Education, not financial advice.  
Cite as: TradeLabs Learn, "Futures Trading", https://learn.tradelabsai.com/markets/futures-trading/

Futures trading means buying and selling standardised contracts on regulated exchanges to profit from price moves in stock indexes, commodities, interest rates, currencies or crypto. Futures are popular with active traders because of deep liquidity, nearly 24 hour trading, low costs and the ability to go long or short equally easily. They are also leveraged, so understanding contract size and margin is not optional.

## Getting started

1. **Open a futures enabled account** with a broker regulated as a futures commission merchant in the US, or the equivalent elsewhere. See [Futures Commission Merchants (FCM)](https://learn.tradelabsai.com/industry/futures-commission-merchants/).
2. **Learn the contract specifications** for anything you trade: size, tick value, hours, expiry and settlement. See [Contract Specifications](https://learn.tradelabsai.com/futures/contract-specifications/).
3. **Start with micro contracts.** Micro E-mini index futures and micro crude, gold and Bitcoin futures are a tenth or less of the full size, so position sizing is manageable on smaller accounts.

## Popular futures for active traders

| Contract | Tick value | Notes |
|---|---|---|
| E-mini S&P 500 (ES) | $12.50 per 0.25 point | Most liquid equity index future |
| Micro E-mini S&P 500 (MES) | $1.25 per 0.25 point | One tenth of ES |
| E-mini Nasdaq 100 (NQ) | $5.00 per 0.25 point | More volatile than ES |
| Crude oil (CL) | $10 per $0.01 | Very active, news sensitive |
| Gold (GC) | $10 per $0.10 | Reacts to rates and the dollar |
| 10 year Treasury note (ZN) | $15.625 per 1/64 point | Interest rate expectations |

## A worked Micro E-mini trade

**Example: Sizing a futures trade from risk**
**Account:** $8,000. Risk 1% = $80.
**Setup:** the S&P 500 index future pulls back to a support level in an uptrend.
**Entry:** buy MES at 5,210.00. **Stop:** 5,198.00, which is 12 points or 48 ticks. **Target:** 5,240.00, 30 points.
**Risk per contract:** 12 points × $5 = $60. One contract fits the $80 rule; two would not.
**Results:** target = 30 × $5 = +$150. Stop = minus $60, plus commissions and any slippage.
The same stop on one full size ES contract would risk $600, far above the plan.

## Margin and daily settlement

Brokers require initial margin to open a position and maintenance margin to keep it. Day trading margins at some brokers are much lower than overnight margins, which tempts traders to oversize. Gains and losses are settled into your account every day. Keep plenty of cash beyond the margin requirement. See [Futures Margin: Initial and Maintenance](https://learn.tradelabsai.com/futures/futures-margin/) and [Mark-to-Market](https://learn.tradelabsai.com/markets/mark-to-market/).

## Trading hours

Many US futures trade from Sunday evening to Friday afternoon with a one hour daily break. Liquidity is deepest during the underlying market's main session. Overnight sessions are thinner and can move sharply on global news. See [Trading Sessions](https://learn.tradelabsai.com/markets/trading-sessions/).

## Rolling and expiry

Each contract expires. Equity index futures roll quarterly, commodities often monthly. Volume moves to the next contract around the roll date, and you need to close or roll before expiry, especially for physically settled contracts. See [Rolling Futures Contracts](https://learn.tradelabsai.com/futures/rolling-futures-contracts/) and [First Notice Day and Last Trading Day](https://learn.tradelabsai.com/futures/first-notice-day/).

## Costs

- **Commissions and exchange fees** per contract, per side.
- **The spread**, usually one tick in the most liquid contracts.
- **Data fees** for real time exchange data at some brokers. See [Market Data Fees](https://learn.tradelabsai.com/orders/market-data-fees/).

There are no borrow fees for shorting and no financing charges as such; carrying costs are built into futures prices.

## Taxes in the US

Many regulated futures contracts in the US receive Section 1256 tax treatment, where gains are taxed as 60% long term and 40% short term regardless of holding period, and positions are marked to market at year end. Rules are specific; see [Trading Taxes and Capital Gains](https://learn.tradelabsai.com/industry/trading-taxes-and-capital-gains/) and a tax professional.

## Common mistakes

- **Trading full size contracts on a small account.**
- **Sizing from margin rather than from the stop.**
- **Ignoring contract roll dates** and accidentally trading an illiquid expiring contract.
- **Holding through major reports** like crude inventories or the jobs report without a plan.

## Frequently asked questions

### How much money do you need to trade futures?

It depends on the contract. Micro contracts can be traded with a few thousand dollars, but you should keep far more than the minimum margin to absorb normal moves.

### Are futures riskier than stocks?

They are leveraged, so the same price move creates larger gains and losses relative to your money. With proper sizing, the risk per trade can be controlled.

### Can you trade futures with a small account?

Yes, using micro contracts and strict risk rules. Full size contracts are usually too large for small accounts.

## Sources

- U.S. Commodity Futures Trading Commission, [Learn and protect](https://www.cftc.gov/LearnandProtect)
- Wikipedia, [Futures exchange](https://en.wikipedia.org/wiki/Futures_exchange)

## Continue learning

- Next lesson: [Options Trading](https://learn.tradelabsai.com/markets/options-trading/)
- Previous lesson: [Forex Trading](https://learn.tradelabsai.com/markets/forex-trading/)
- Related: [Forex Trading](https://learn.tradelabsai.com/markets/forex-trading/): How forex trading works in practice: choosing pairs, lot sizes, pips, leverage, sessions, costs and risk management, with a fully worked EUR/USD trade.
- Related: [What Is a Future?](https://learn.tradelabsai.com/markets/what-is-a-future/): A futures contract is an agreement to buy or sell something at a set price on a future date. Learn how futures work, margin, leverage, settlement and who uses them.
- Related: [How Futures Contracts Work](https://learn.tradelabsai.com/futures/how-futures-contracts-work/): A futures contract is a standardised agreement to buy or sell an asset at a set price on a future date. Learn how futures trade, margin, daily settlement and expiry.
- Related: [Futures Margin: Initial and Maintenance](https://learn.tradelabsai.com/futures/futures-margin/): Futures margin is a performance bond, not a loan. Learn initial and maintenance margin, day trading margin, margin calls, SPAN and how to avoid forced liquidation.
- Related: [Tick Size and Tick Value](https://learn.tradelabsai.com/futures/tick-size-and-tick-value/): Tick size is a future's smallest price move; tick value is what it is worth per contract. Learn to calculate P&L, risk per trade and position size from ticks.
- Related: [Rolling Futures Contracts](https://learn.tradelabsai.com/futures/rolling-futures-contracts/): Rolling moves a futures position from an expiring contract to a later one. Learn when to roll, how to use calendar spreads, roll costs and common roll schedules.
- Related: [Contract Specifications](https://learn.tradelabsai.com/futures/contract-specifications/): Contract specifications define a futures contract's size, tick, months, hours and settlement. Learn every field, with examples for E-mini S&P, crude oil and gold.