Investing in Futures: Complete Guide from Scratch

Futures markets move trillions of dollars every day and are the preferred instrument of professional traders for intraday trading. Yet for many beginners they remain a mystery wrapped in confusing terminology. This guide will demystify futures and give you everything you need to get started from scratch.

It does not matter if you come from the world of stocks, forex, or cryptocurrencies. Futures have unique characteristics that make them an extraordinary tool for day trading. And with the emergence of prop firms, you no longer need tens of thousands of dollars to access them.

What Are Futures Contracts?

A futures contract is a standardized agreement to buy or sell an asset at a predetermined price on a future date. It is a financial derivative, meaning its value derives from another underlying asset (a stock index, a commodity, a currency, etc.).

Think of it this way: imagine a farmer wants to lock in today the price at which he will sell his wheat harvest in 3 months. He signs a contract with a buyer fixing the price now. That is a future in its most basic form.

For traders, the important thing is that you do not need to deliver or receive anything. The vast majority of futures trades are closed before expiration. You buy a contract at one price, sell it at another price, and keep the difference. Or you sell it first (short) and buy it back later if you believe the price will drop.

Futures vs Stocks, Forex, and Cryptocurrencies

Understanding the differences with other markets will help you appreciate why futures are special.

The key advantages of futures for day trading are strict regulation (you trade on a centralized exchange, not against your broker), transparency (the order book is real and public), and tax efficiency in some countries.

Essential Futures Terminology

Before you start trading you need to master these fundamental concepts.

Contract: The basic unit of trading. Each market defines its contract size. For example, one E-mini S&P 500 contract (ES) is worth $50 per index point.

Tick: The minimum price movement. In the ES, one tick is 0.25 points, which equals $12.50 per contract. In the Micro E-mini Nasdaq (MNQ), one tick is 0.25 points, which equals $0.50 per contract.

Margin: The amount of money you need to deposit to open a position. It is not a cost but a guarantee. Intraday margin is usually a fraction of the overnight margin.

Leverage: The ability to control a large notional value with a small deposit. If one ES contract controls $250,000 of the index but you only need $500 in intraday margin, you have 500:1 leverage.

Expiration: Futures have an expiration date. The most traded are quarterly contracts (March, June, September, December).

Rollover: The process of closing the contract that is about to expire and opening a position in the next contract. It occurs a few days before expiration and most platforms handle it automatically.

Major Futures Markets

Not all futures are the same. For day trading, these are the most relevant markets.

Stock Indices

The most traded in the world. They represent the value of a basket of stocks.

Commodities

Futures were born in this market. Crude oil, gold, and natural gas are the most popular.

Currencies

Futures on currency pairs, traded on the CME.

For detailed information on each ticker, visit our tickers section.

Contract Sizes: Standard, Mini, and Micro

One of the best evolutions in the futures market has been the introduction of micro contracts. Before, trading futures required accounts with tens of thousands of dollars. Micros changed that completely.

For beginners, micro contracts are the ideal choice. They allow you to trade with minimal risk per contract while you learn market dynamics. A 10-point move in MES means $50, while in ES it means $500.

In the context of prop firms, micros are especially useful because they allow you to adjust your position size with precision. If your risk per trade is $50, you can trade exactly the number of micros that fits that amount based on the distance of your stop loss.

Trading Sessions: When to Trade

Futures trade nearly 24 hours a day Monday through Friday, but not all hours are equal. Activity and liquidity vary enormously depending on the session.

The recommendation for most traders is to trade during the U.S. open (15:30–18:00 Madrid time). That is when there is the most volume, the most movement, and the best setups. If you live in Latin America, the 8:30–11:00 Central Time window is ideal.

Why Futures Are Ideal for Day Trading

Futures have several specific advantages that make them the preferred instrument for intraday trading.

Massive liquidity. The E-mini S&P 500 trades more than 1 million contracts per day. This means minimal spreads (usually 1 tick) and the ability to enter and exit without significant slippage.

A fair market. You trade on a centralized exchange (CME Group) with a transparent order book. There is no dealing desk betting against you as is the case with many forex or CFD brokers.

Efficient leverage. You can control large positions with little capital, which allows traders with modest accounts to participate in institutional markets.

No PDT rule. In U.S. stocks, you need $25,000 to make more than 3 intraday trades per week (Pattern Day Trader rule). In futures, this rule does not apply.

Tax advantages. In the U.S., futures receive favorable tax treatment under the 60/40 rule (60% long-term gains, 40% short-term gains). Conditions vary in other countries.

How to Start Trading Futures Step by Step

If you are convinced that futures are for you, here is the step-by-step path.

Step 1: Education. Before putting a single dollar in the market, study. Learn technical analysis, risk management, and the specific mechanics of futures. Dedicate at least 2–3 months to your education.

Step 2: Choose a platform. The most popular platforms for futures are NinjaTrader, Rithmic, Tradovate, and TradingView. Many prop firms include a free platform license with the evaluation.

Step 3: Practice on a simulator. All platforms offer demo mode with real-time data. Trade on a simulator until you have at least 2–3 months of consistent results.

Step 4: Start with a prop firm. Instead of depositing $10,000+ at a broker, buy a prop firm evaluation for $50–$200. If you pass, you trade with the firm's capital. If not, you only lose the cost of the evaluation.

Step 5: Start with micros. Even if your account allows you to trade minis, start with micro contracts. An MES or MNQ lets you learn real market dynamics with minimal risk.

Costs of Trading Futures

Before getting started, be clear about the associated costs.

The total cost to get started with a prop firm can be as low as $50–$100, which is the price of a basic evaluation at firms like Apex or Bulenox during discount periods. Compare updated prices in our discounts section.

Why Prop Firms Are the Best Entry Point

Historically, trading futures required significant capital. An account at a futures broker requires a minimum of $2,000–$10,000, plus data and platform costs. To trade a single ES contract with intraday margin you need at least $500–$1,000 in free margin.

Futures prop firms eliminate this barrier. You pay a relatively cheap evaluation, demonstrate that you can trade profitably and with discipline, and the firm gives you access to a funded account. If you win, you keep 70–90% of the profits. If you lose, you only lose what you paid for the evaluation.

In addition to economic accessibility, prop firms offer:

• Structure and discipline: Drawdown and consistency rules force you to trade professionally.
• Limited risk: Your maximum loss is the cost of the evaluation, not $10,000.
• Scalability: You can trade multiple accounts simultaneously to increase your exposure.

To understand in detail how they work and which one to choose, read our guide on what a prop firm is and check out the getting started guide.

Common Beginner Mistakes in Futures

To finish, these are the mistakes we see most often in traders who are starting with futures:

• Trading contracts that are too large. Starting with an E-mini NQ when you should be using a Micro. Ego kills accounts.
• Ignoring sessions. Trading during the Asian session expecting the movements of the American open.
• Not knowing the value per tick. Entering a crude oil (CL) trade without knowing that each tick is worth $10 can be catastrophic.
• Over-leveraging. Futures already have built-in leverage. You do not need to maximize it.
• Trading too many markets. It is better to master one instrument (for example, MNQ) than to trade 5 different ones without understanding any of them.

Futures are an extraordinary instrument for disciplined traders. The combination of liquidity, transparency, and accessibility through prop firms makes them the best option for anyone who wants to pursue day trading professionally.

Frequently Asked Questions

1. How much money do I need to start trading futures?

With a prop firm, you can start with as little as $50–$200, which is the cost of an evaluation. If you prefer to trade with your own capital, you will need a minimum of $2,000–$5,000 at a futures broker, although at least $10,000 is recommended to have enough margin to trade with proper risk management.

2. Which futures contract is best for beginners?

The Micro E-mini Nasdaq (MNQ) or the Micro E-mini S&P 500 (MES) are the most recommended. They have good liquidity, a low value per tick ($0.50 for MNQ, $1.25 for MES), and enough volatility to generate trading opportunities without excessive risk.

3. Is it possible to make a living from futures trading?

Yes, but it requires time, discipline, and adequate capitalization. Most traders need at least 1–2 years of consistent practice before they can generate stable income. Prop firms facilitate this path by providing capital without the need for significant personal investment.

4. Are futures riskier than stocks?

The inherent leverage of futures can amplify both gains and losses, which makes them potentially riskier if not managed correctly. However, with proper risk management and micro contracts, the risk per trade can be even lower than that of many volatile stocks.

5. Do I need to be in front of the screen all day to trade futures?

No. Most futures day traders trade for 2–4 hours a day, focusing on the highest-liquidity session (the U.S. open). Many successful traders only take 1–3 trades per session. Quality over quantity is the rule in futures.