What Are Futures? Futures Trading Explained
A futures contract is a standardized agreement to buy or sell an asset at a set price on a future date. In practice, day traders never take delivery of anything — they buy and sell the contract itself to profit from the price moving up or down. You can go long (bet it rises) or short (bet it falls) just as easily.
The basics: contracts, ticks & points
Each futures market has a defined tick size (the smallest price move) and a tick value (what that move is worth in dollars). For example, the E-mini S&P 500 (ES) moves in 0.25 "ticks," and each tick is worth $12.50. When price moves a full point (four ticks), that's $50 per contract. Understanding tick value is how you translate chart movement into real profit and loss.
Popular futures for day traders
- ES — E-mini S&P 500. The most-watched index future.
- NQ — E-mini Nasdaq-100. More volatile, loved by momentum traders.
- MES / MNQ — the micro versions of ES and NQ, at 1/10th the size — perfect for beginners.
- CL (crude oil), GC (gold), and others for commodity traders.
Micro vs. mini contracts
Micros (MES, MNQ) are the beginner's best friend. They're 1/10th the size of the mini contracts, so your risk per tick is 1/10th too. That means you can learn, build consistency, and pass prop-firm evaluations without oversized swings blowing up your account. Start micro, scale up as you prove yourself.
Margin & leverage
Futures are leveraged — you control a large notional position with a relatively small margin deposit. That cuts both ways: leverage magnifies gains and losses. This is exactly why risk management is non-negotiable. Respect the leverage or it will humble you.
Leverage is a tool, not a cheat code. It rewards discipline and punishes gambling.
Why day traders love futures
- Deep liquidity and tight spreads on the major contracts.
- Nearly 24-hour trading through the week — trade around your schedule.
- Prop firm access — pass an evaluation and trade a funded account instead of risking big personal capital. See how payouts work →
- Simple, transparent instruments compared to options.
Learn futures the real way — live. I break down ES and NQ setups every session inside TradingTaco.
Next: How to Day Trade Futures →This article is for educational purposes only and is not financial advice. Trading futures carries substantial risk of loss.