Day trading, as I mentioned before, comes in many different forms and you need to find what works best for you and your styles, I trade strictly the Futures Market and only the ES Mini, but whenever I say this people ask what am I talking about and this financial instrument is indeed less popular than others like stocks, that’s why I decided to put up a complete guide with the basics of trading futures, packed with all you need to know to get started.

With tons of different ways to day trading, with hundreds of instruments (i.e. – stocks, bonds, futures, commodities, options, and more). It can be hard to find what works best for you. There are so many great ways to do this, and after years of searching for the best for me, I found Futures and started to make a living out of it.

Whether you’re a seasoned investor or a curious beginner, understanding the futures market, its contracts, and how they work is essential.

Getting Started: The Basics of Trading Futures

Before diving into futures trading, make sure you have a solid understanding of the basics. Familiarize yourself with the terminology, what are futures, market hours, and contract specifications.

Remember, practice and continuous learning are key to success here. So, let’s start with the basics of trading futures:

What is the Futures Market?

Futures are financial derivatives that allow traders to speculate on the future price of underlying assets and it is better known as commodities, which are stuff like crude oil, metals, soy, etc… all of the assets that you can touch, physical stuff as well as currencies, interest rates, or indices.

Unlike stocks, which represent ownership in a company, futures contracts are standardized agreements to buy or sell an asset at a predetermined price on a specific date in the future.

What Are Futures Contracts?

Futures contracts are financial instruments that allow investors to buy or sell an underlying asset at an agreed-upon price on a future date. These contracts are traded on organized exchanges, like most financial instruments, and serve both risk management and speculative purposes.

Basically, a futures contract is a standardized agreement between two parties, the buyer (long position) and the seller (short position).

Understanding Futures Contracts

The underlying asset can be anything from commodities like oil, gold, or wheat to stock indices or currency exchange rates. The main thing about futures contracts is the expiration date, which is set in the future, allowing investors to plan and hedge against price volatility.

Each futures contract has specifications:

• The underlying asset (e.g., crude oil, or the S&P 500 index ).
• Contract size (e.g., 1,000 barrels of oil, 100 troy ounces of gold).
• Delivery month (e.g., March, June, September, December).
• Contract price (the agreed-upon price at which the asset will be bought or sold).
• The tick size (the minimum price fluctuates)

Futures Contract Rollover

When futures contracts started, you have to remember they were for physical items with expiration dates. They were commodities.

Even though we trade the ES e-mini which has no real products, it still works on a contract basis. The normal term for contracts is quarterly:

• March – 03/year (December – March)
• June -06/year (March – June)
• September – 09/year (June – September)
• December – 12/year (September – December)

The rollover for the contract is usually 8 days before the actual contract date. There is no real reason for this, it simply works this way.

With the chart platform, Ninja Trader, for example, they send you a notice telling you when to change the contract (this isn’t too important, just something for you to be aware of for now).

What is the E-mini or ES?

The futures market also works with indexes such as S&P 500 which is the top 500 US corporations, and this is called the E-mini S&P 500, or ES mini.

There are also other indexes such as Dow, Nasdaq, Russell, and many more.

My instrument is the ES Mini futures. It is known to be the smoothest of them all. Easiest to learn with and to trade. There is nothing physical at all with the ES mini. It is purely speculatively, and that’s what makes it easier to work with.

Understanding E-mini or ES

Just like any other futures contract but with a few twists, and the most noticeable is the contract size.

This is the quantity of the asset that the contract represents, like 1,000 barrels of oil. A standard S&P 500 futures contract is represented by $50 times the value of the index, for example, if the S&P futures are traded at $2,500 then a single contract would have a value of $125,000.

In that case, for every single point the S&P 500 Index moves, then the contract will decrease or increase $50.

Another thing to keep in mind is the tick size, on the E-mini is around $12.50 which is 0.25 per contract. For every tick down or up in the total value of the S&P 500, the contract will gain or lose $12.50 in value.

So, you must be thinking, do I need $125,000 or more to trade the E-mini? and the answer is no, you don’t. that’s when “margin” comes into play, which means that traders only need to have a fraction of the total value of the contract, this can vary a lot depending on the broker or trading platform you choose.

Margin in the Futures Market

What is margin? In the actual stock market, it is money you borrow to invest in the market. When you buy a stock (share) of the company, money immediately gets taken out of your account and invested into that company, and a margin happens when you don’t have enough money of your own to buy it and borrow it from your broker.

In the futures market, it works completely differently. You are required to have a certain amount of money in your account to trade specific contracts, if you don’t have enough money in your account, you can’t trade.

For example, the minimum margin needed to trade the E-mini S&P 500 is $12,500.

This margin minimum can differ a lot, depending on the underlying value of the contracts and their volatility. So, the lower the value, the lower the margin will be as well as the less volatility a contract has the lower the minimum margin will be.

Another thing about margins in the futures markets is the maintenance margin, which is usually 10% less than the minimum margin to trade. For example, the minimum to trade if the E-mini is $12500, then the maintenance margin required is 11250.

Falling below that margin

By now you must be thinking about what happens when your account falls below that margin, and the answer is easy: you will need to deposit more cash into your account or just liquidate/close your open position.

The main thing you need to know about a futures contract account is that if the value of the E-mini or any contract you hold declines, that money comes out from your account. This is important because depending on the margin requirements, an open position will not need to make a big move against you before you’ll need to add more money to your account.

What is the Best Trading Futures Schedule for You?

There’s no schedule or best schedule for trading futures to follow here since that’s something you need to come up with based on your free time or the time you want to dedicate to trading and the market hours.

The futures markets have a specific hour and will depend on the commodity you choose or the place you choose. For example, the U.S. futures markets, like the Chicago Mercantile Exchange (CME), are most active during the regular trading hours of 9:30 AM to 4:00 PM EST, but they have extended hours too.

When it comes to specific assets like the S&P 500 E-mini can be traded almost 24 hours a day, five days per week. From Sunday 6 pm to Friday 5 pm EST but you need to keep in mind there’s a daily maintenance period from 5 pm to 6 pm.

Another thing you need to keep in mind are the periods of low liquidity or increased volatility and use them to your advantage.

Popular Futures Markets

Like there are many different stocks to buy there are a ton of different futures contracts to buy, each with its requisites, movements, sizes, prices, and tick sizes. You can find all kinds of commodities, from gold and silver to crude oil and natural gas as well as products like corn, wheat, and soybean.

But among all of the different assets you can find, some get more attention. Let’s explore some exciting markets:

• E-Mini S&P 500: This is what I mainly trade, it tracks the performance of the S&P 500 index. It’s like investing in the overall U.S. stock market.
• Crude Oil Futures: Speculate on oil prices. Geopolitical tensions, supply-demand dynamics, and oil futures have it all.
• Gold and Silver Futures: A shiny way to hedge against inflation or currency fluctuations.
• Eurodollar Futures: These are based on interest rates. Think of them as bets on future U.S. dollar interest rates.

Differences from Other Financial Instruments

While futures have many benefits and can be traded or held for investing like any other financial instrument they also have a lot of differences that a worth pointing out.

Key differences between futures and other financial instruments:

Initial and Maintenance Margins

To trade futures, you need to post an initial margin as collateral. If the market moves against your position, you may receive a margin call to deposit additional funds.

Margin Calls

Margin calls occur when your account balance falls below the maintenance margin level, requiring you to deposit more money or close positions to cover the shortfall.

Liquidity in Futures Markets

Futures markets are generally very liquid, especially for popular contracts like those on commodities and major indices. High liquidity means you can enter and exit positions with minimal price impact.

While many stock and bond markets are also liquid, some specialized or smaller-cap instruments may not be as easily traded. Futures, due to their standardization and exchange trading, often have superior liquidity.

Futures Pricing Mechanism

Futures prices are influenced by the spot price of the underlying asset, interest rates, and the cost of carry. They can also reflect market expectations of future price movements.

Impact of Speculation and Hedging

Speculation and hedging activities significantly impact futures pricing. Speculators aim to profit from price movements, while hedgers seek to offset potential losses in the spot market.

Futures vs. Options

Futures contracts obligate both parties to fulfill the contract, whereas options grant the right (but not the obligation) to buy or sell.

Also, options involve a premium, while futures do not.

Futures vs. CFDs (Contracts for Difference):

CFDs are derivatives that allow speculation on price movements without owning the underlying asset, while Futures require physical delivery or cash settlement upon expiration.

Technical Analysis for Futures Trading

The technical analysis for futures trading is no different from any other trading analysis, you still need to have strong fundamentals starting from the terminology or the main terms and definitions as well as more advanced knowledge like price patterns, candlestick patterns, and volume.

Once you have tackled all of the main concepts, including supports and resistances, you can move to learn about the different indicators like Moving Averages, MACD, RSI, or any other.

After that, you need to dedicate yourself to practice and test all the things you have learned, this is called paper trading is a must. Do it until you find something that works for you and stick to it.

Here are some important aspects of the technical analysis:

• Candlestick Patterns: These candlesticks on your charts reveal price patterns, yes but each candle has something to say, each one is a fight between buyers and sellers.
• Moving Averages: Smooth out price data to spot trends. The 50-day moving average crossing above the 200-day? That’s a golden cross!
• Support and Resistance: Imagine prices bouncing off invisible walls. Those are support and resistance levels.

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Risk Management Strategies

Trading is fun and can be a happy trigger, but it also comes with significant risks, that’s why effective risk management is essential to stay profitable and protect your hard-earned money. It’s the only way to make sure you have long-term success, remember that, all the money you don’t lose in the market is a gain.

The first thing you need to do is set rules, and don’t break them no matter what happens. In the beginning, it will be hard, once you go live in the market it’s easy to get lost and start chasing trade after trader, or revenge trade, and those are things that will make you lose a ton of money.

There’s always another trade coming, don’t chase and if you had a bad day, don’t trade and go for a walk. Psychology in trading is key and one of the best risk management strategies.

But here are other risk management strategies that are important and popular:

• Stop Loss Orders: Set a price level where you’ll exit if things go south. Protect yourself from excessive losses.
• Position Sizing: Don’t bet the farm on a single trade. Calculate how much to risk per trade.
• Diversification: Spread your risk across different futures contracts. Don’t put all your eggs in one basket.

Indicators

The world of indicators is vast and with the amount of “magical guides” around the internet even veteran traders can think they are some sort of money-making machine, and the truth is no, indicators are useful, yes, they show you a ton of data compressed and many people use them but they are not magic.

The first thing you need to learn about indicators in the futures market is that less is more. Don’t overload your chart with tens of indicators, it can lead to analysis paralysis.

Second, start using the most popular indicators, and learn how they work and the different strategies. The next step will be paper trading for a few months until you find something that works for you.

Here are the most popular indicators:

• RSI
• Moving Averages
• MACD
• Bollinger Bands
• ATR
• Volume Profile.

Choosing a Futures Broker

Choosing a broker is the first step you will ever take towards starting trading, and it’s by far the most important decision. Some brokers have better platforms but higher commissions and fees while others may have good commissions but bad platforms.

Make sure the one you choose lets you do paper trading, or trade with fictional money in a real-time market, that way you can practice all you want.

Here are other things you need to pay attention to when choosing a broker:

• Regulation: Make sure your broker is legit. You don’t want your funds disappearing into the Bermuda Triangle.
• Commissions and Fees: Compare costs. Some brokers charge more than a fancy coffee for each trade.
• Platform and Tools: User-friendly interfaces matter. You don’t want to decipher hieroglyphics while trading.

How to Start Trading Futures?

Start trading futures is straightforward, all you need is to top-up your broker account and start shooting trade, right? WRONG! You will lose a lot of money if you do it that way, the first you need to do is start learning!

Step 0, start learning all the basics, you can start with the Free Mini Course and the Cheat Sheet as well as the Simplifying Day Trading Futures course.

Then, you can move on to the next steps:

Step 1: Choose a Broker

This is the first step for trading futures after you have studied a ton. You should aim for a well-known broker with good reviews and a track record.

Step 2: Open an Account

After choosing the right broker for you, open a normal or demo account. Usually, the process will include giving your personal information and adding funds to complete the verification. Most brokers ask for an ID photo too.

Step 3: Start Paper Trading!

Now, you’re all set up and your account funded, but I highly recommend you start paper trading first, and after a few months move to the live market, you will already be funded!

Here’s a Quick Futures Trade Explained:

Conclusion

Trading futures isn’t for the faint-hearted. It’s like riding a bull thrilling, but you might get thrown off. Educate yourself, practice, and remember that even the pros have bad days.

FAQs

If you have any questions you can always ask them in my Facebook Group and if you want to learn day trading basics – check out Day Trading Courses.

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Last Updated on July 28, 2026