Free Trading School · Level 13: Trading Different Markets
Futures and commodities
A futures contract is an agreement to buy or sell an asset at a set price on a future date. Traders use futures on stock indices, oil, gold, grains and interest rates. They are standardised, centrally traded and highly liquid.
- Each contract has a fixed size and tick value. One E-mini S&P 500 contract moves $50 per index point; micro contracts are one tenth of that.
- Futures are leveraged: you post margin, not the full value.
- Contracts expire, so positions must be closed or rolled to the next month.
- Commodities respond to supply, demand, weather, inventories and geopolitics.
A trader buys one micro E-mini S&P 500 contract ($5 per point) with a 10-point stop. Risk is 10 × $5 = $50. With the full-size E-mini ($50 per point), the same stop would risk $500.
Learn the contract specifications (size, tick value, hours, expiry) before you trade any future. Micro contracts are made for learning.
Quick answers
A futures contract is an agreement to buy or sell an asset at a set price on a future date. Traders use futures on stock indices, oil, gold, grains and interest rates. They are standardised, centrally traded and highly liquid.
Learn the contract specifications (size, tick value, hours, expiry) before you trade any future. Micro contracts are made for learning.
$50. 10 points × $5 = $50.
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