What is futures trading?
A plain-English introduction to futures: what a contract is, how leverage and expiry work, and the difference between minis and micros.
Updated
A futures contract is an agreement to buy or sell something at a set price on a future date. Traders use them to bet on which way a market will move: buy if you think it's going up, sell if you think it's going down, and close out for a profit or loss before anything is delivered.
What a contract is
Each futures contract tracks one market, such as the S&P 500 index, crude oil, or gold, and has a fixed size. When you buy one, you don't pay the full value of that market. You post a deposit called margin, and your profit or loss moves with the price from there. Most traders never take delivery; they close the position beforehand and keep the difference.
Leverage
Because you only post margin, a small amount of money controls a much larger position. That is leverage, and it cuts both ways: a move in your favour is magnified, and so is a move against you. This is why futures can gain or lose value quickly, and why risk controls matter.
Expiry
Every contract has an expiry date, so a market like the S&P 500 trades as a series of contracts through the year. As one nears expiry, traders “roll” to the next. That is why a symbol carries a code for its month, and why the contract you trade today isn't the same one you traded a few months ago.
Minis and micros
The same market often comes in two sizes so different account sizes can trade it:
- Minis are the standard, full-size contract, such as the E-mini S&P 500 (ES).
- Micros are a smaller version, usually one-tenth the size, such as the Micro E-mini S&P 500 (MES).
Micros let you take the same trade with far less at stake per tick, which makes them popular for smaller accounts and for scaling risk. OmenSyncer can copy a mini trade onto a micro account and keep it in proportion.
Where OmenSyncer fits
OmenSyncer copies futures trades between your accounts: you trade in one account and it mirrors that trade onto the others in real time. If you trade through a prop firm, read What is a prop firm next, along with which markets and instruments OmenSyncer copies.