Skip to content
GetProfitable
Search

Futures and Leverage Explained

What a futures contract actually is, how to read a contract spec and do the tick math, what margin really means, when the market is liquid, the risks that only exist in futures, and how to approach micros and prop firms without blowing up. Built on the risk course's arithmetic.

Module 1: What a futures contract is

A standardized promise cleared by an exchange, with fixed months, codes, expirations and settlement rules, used by hedgers and speculators for different reasons.

  1. A standardized promise8 min
  2. Exchanges and the clearing house9 min
  3. Contract months, codes and expiration10 min
  4. Cash versus physical settlement, and who uses futures9 min

Take the module quiz

Module 2: Contract specs and tick math

Tick size, tick value, point value and multiplier for the contracts retail traders actually use, ending in a full worked P&L table.

  1. Tick size, tick value and point value9 min
  2. The equity index contracts: ES, NQ, YM and RTY10 min
  3. Energy, metals, bonds and currencies11 min
  4. The full worked P&L table10 min

Take the module quiz

Module 3: Margin and leverage

Initial, maintenance and day-trade margin, notional versus margin, effective leverage, and why cheap intraday margin is a trap for small accounts.

  1. Initial, maintenance and day-trade margin9 min
  2. Notional versus margin, and effective leverage9 min
  3. Margin calls and auto-liquidation9 min
  4. Why day-trade margins are a trap for small accounts10 min

Take the module quiz

Module 4: Session structure and liquidity

Globex hours, RTH versus ETH, settlement, the open and close, where the volume is, holidays, roll week and how continuous contracts distort charts.

  1. Globex hours, RTH and ETH9 min
  2. Settlement time and the open and close9 min
  3. Volume by session, and holidays8 min
  4. Roll week and continuous contracts11 min

Take the module quiz

Module 5: Futures-specific risks

Weekend gaps, limit moves and circuit breakers, the April 2020 negative oil case, data and commission costs, and Section 1256 tax basics.

  1. Gaps, the weekend and the daily break9 min
  2. Limit up, limit down and circuit breakers9 min
  3. Case study: negative oil, April 202010 min
  4. Data, commission costs and Section 1256 tax basics10 min

Take the module quiz

Module 6: Trading approach and prop firms

Micros as training wheels, sizing and bracket orders, how futures prop firm evaluations and trailing drawdowns really work, and a first-90-days plan.

  1. Micro contracts as training wheels8 min
  2. Sizing per the risk course, and bracket orders9 min
  3. The futures prop firm model: evaluations, trailing drawdown and payouts12 min
  4. Your first 90 days in futures10 min

Take the module quiz

Educational content, not financial advice.