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Futures contract

Futures Contract

Trading

Definition

A standard agreement to buy or sell an asset at a price set today, for a future date. Prop firm traders do not hold the contract until expiration: they enter and exit on the same day, profiting or losing from price movement. Each contract pre-defines how many dollars each movement is worth.

Detailed explanation

Contracts are traded on a central exchange, and in prop firms, these are mainly CME Group contracts: stock indices, energy, metals, currencies, and more. Because the contract is standard, each has a fixed tick size and point value, from which the risk of each trade is calculated. Most indices have two sizes: mini and micro. A micro contract is worth one-tenth of its mini contract, making it the primary tool for adjusting position size in a small account.

An example from the prop world

A long of one ES contract at 6,000 and exiting at 6,004 is 4 points. Each point in ES is worth $50, so the profit is $200 before commissions.

How it works at the firms on this site

Based on the rules listed on our firm pages. Rules get updated, so check the firm's page before buying.

FundedNext

You are allowed to trade futures contracts of CME Group and its subsidiaries: indices, energy, metals, agricultural commodities, and currencies.

ES contract

The S&P 500 mini futures contract, one of the most traded contracts in the world. Each point is worth $50, and the tick is 0.25 points, meaning $12.50 per contract.

NQ contract

The Nasdaq-100 mini futures contract. Each point is worth $20, and the tick is 0.25 points, meaning $5 per contract. It is more volatile than ES, and therefore popular with scalpers and risky for small accounts.

MES contract

The micro version of ES: the same S&P 500 index at a tenth of the size. Each point is worth $5 and the tick (0.25 point) is worth $1.25, so you can build a precise position even with a small account.

Tick value and point value

A tick is a contract's smallest price move, and the tick value is how many dollars that move is worth for one contract. A point is made up of several ticks, so the point value is the tick value times the number of ticks in a point.

Contract Rollover

The rollover from a contract approaching expiration to the next month's contract. In index contracts (ES, NQ, MES, MNQ), there is a contract for each quarter, and about a week before expiration, most of the volume shifts to the next contract. A day trader must ensure their chart and orders are on the correct contract.

News trading policy

This is a risk management rule in funded trading accounts that prohibits traders from opening, closing or modifying active positions within a set time window (usually a few minutes) before, during and after the release of major high-impact economic events (Tier One).