How to Trade Futures: A Beginner’s Guide to Contracts, Ticks and Your First Trade

To trade futures, you buy or sell a standardized contract on an exchange. Your profit or loss then changes by a fixed dollar amount for every tick the price moves. Learn your contract’s tick value, size each trade from a loss you can afford, and place a stop on every trade. This guide covers each piece in order, then walks through a first trade with numbers. It ends with how prop firm accounts fit in.

What is a futures contract?

A futures contract is an agreement to buy or sell a set quantity of something at an agreed price on a future date. The exchange fixes every detail: the quantity, the minimum price step, the trading hours and the expiry dates. For the markets most retail traders use, that exchange is CME Group, which runs the CME, CBOT, NYMEX and COMEX venues.

Because every contract is identical, buyers and sellers can trade with each other instantly through a central order book. The exchange clearinghouse stands between both sides, so you never depend on one counterparty paying you.

Almost no day trader holds a contract to expiry. Equity index futures such as ES and NQ are cash settled at expiry. Crude oil (CL) and gold (GC) are physically delivered, which is why brokers and prop firms close or block positions in an expiring month. Before expiry, traders move to the next month, a process called rolling. Our guide to futures rollover covers the timing.

Ticks, tick value and what a move is worth

A tick is the smallest price step a contract can move. The tick value is what that step is worth in dollars for one contract. These two numbers turn any chart move into money.

Contract	Tick size	Tick value	Value of a full point or $1
ES (S&P 500)	0.25 point	$12.50	$50 per point
MES (micro S&P 500)	0.25 point	$1.25	$5 per point
NQ (Nasdaq 100)	0.25 point	$5.00	$20 per point
MNQ (micro Nasdaq 100)	0.25 point	$0.50	$2 per point
CL (crude oil)	$0.01	$10.00	$1,000 per $1 move
GC (gold)	$0.10	$10.00	$100 per $1 move

Profit or loss = ticks moved × tick value × contracts

Example figures: NQ rises 10 points. That is 40 ticks, because there are four ticks in each point. One NQ makes 40 × $5 = $200. One MNQ makes 40 × $0.50 = $20. The full list, including the Dow, Russell and micro metals, is in our contract specs and tick values table.

Margin, leverage and going long or short

To hold a futures position at a broker, you post margin. It is a deposit held against possible losses, not a cost. The exchange sets initial and maintenance margin and changes them when volatility changes. Many brokers also offer lower intraday margins for positions closed before the session ends.

Margin hides your real exposure. Notional value is the full value the contract controls. Example figures: with the S&P 500 index at 6,000, one MES controls 6,000 × $5 = $30,000 of exposure, and one ES controls $300,000. A 1% move in the index is 60 points: $300 on one MES and $3,000 on one ES.

Going long means buying first and profiting if price rises. Going short means selling first and profiting if price falls. In futures, shorting works exactly like buying in reverse. There is no stock to borrow and no extra fee for being short.

Futures accounts are marked to market every day. Gains and losses are settled in cash at each daily settlement. A losing position held overnight reduces your balance that evening, not only when you close it.

Platforms, market data and order types

You need three things to place a trade: a trading platform, a market data feed and an account at a futures broker or prop firm. Common platforms include NinjaTrader, Tradovate, Quantower and Sierra Chart. Many connect through data and order routing services such as Rithmic or CQG. Some prop firms also allow TradingView through a supported connection.

Real time CME data is not free. Exchanges charge monthly fees per user, with lower rates for nonprofessional traders. Prop firms often include data in the account price or charge it separately, so read the fee page before you buy.

Learn four order types first:

• Market: fills now at the best available price, with possible slippage.
• Limit: fills only at your price or better, but may not fill at all.
• Stop market: becomes a market order when price touches your level. Most stop losses use this.
• Bracket: an entry with an attached stop and target. When one exit fills, the other cancels.

Practice placing, moving and cancelling brackets on a simulated account before you trade one live. Many costly beginner mistakes are order mistakes, not analysis mistakes.

Your first trade, step by step

Example figures only. This shows the mechanics, not a recommended setup.

1. Choose the contract. You pick MES, the micro S&P 500, because small tick values let you size precisely.
2. Check the front month. You load the active contract month, the one with the most volume.
3. Set your risk. You decide to risk no more than $50 on this trade.
4. Plan the levels. Entry 6,000.00, stop 5,996.00, target 6,008.00. The stop is 4 points, or 16 ticks. The target is 8 points, or 32 ticks.
5. Size it. One MES loses 16 × $1.25 = $20 at the stop. Two contracts lose $40, which fits inside $50. Three would lose $60, which does not.
6. Place a bracket. Buy 2 MES with the stop and target attached in the same order.
7. Leave it alone. Do not widen the stop. Exit only at the stop, the target or your planned time exit.

If the target fills, you make 32 × $1.25 × 2 = $80. If the stop fills, you lose $40. Now subtract fees. With an example cost of $1.00 per contract round turn, two contracts cost $2. The net result is a $78 gain or a $42 loss. Record both the plan and the outcome in a journal, such as the free PropFirmXchange journal.

A stop market order can fill worse than your stop price in a fast market. Budget a tick or two of slippage when you size.

How this fits prop firm rules

A futures prop firm account replaces margin with a set of loss rules. You do not deposit margin. Instead, you pay a fee and agree to trade inside limits. Most accounts at this stage are simulated. The rules that matter most for a new futures trader are:

• Daily loss limit: a dollar amount you cannot lose in one session. Size every trade from this number.
• Maximum drawdown: often trailing on futures accounts, so the floor rises as your balance grows.
• Contract limits: a cap on how many minis or micros you may hold at once.
• Session close: many firms require you to be flat before a set time near the 5pm New York close.
• News and consistency rules: some firms restrict trading around major releases or cap how much profit one day may contribute.

Rules vary by firm; check each firm’s page on PropFirmXchange in our prop firm directory. To match an account to your budget and preferred rules, use find an account.

Questions traders ask

How much money do I need to start trading futures?

It depends on the route. A broker account needs enough to cover margin and a run of losses on micro contracts. A prop firm evaluation needs only the fee, but you trade inside its loss limits.

Should a beginner trade micro or mini contracts?

Micro contracts, in almost every case. They are one tenth the size, so a normal stop costs a small, controlled amount while you learn.

Can I lose more than my account in futures?

At a broker, yes. A gap or fast market can push a loss past your balance, and you owe the difference. On a prop firm account your loss is usually limited to the fee, because the account itself is closed when a rule is broken.

Trading futures carries a high risk of loss, and leverage makes losses arrive quickly. Most prop firm accounts are simulated, and payouts depend on each firm’s terms. Nothing here is financial advice.