Futures Foundations

Module 1F · Stage 1: Foundations · Back to course

Futures are what most prop firm traders use, so this is where Good Trading Guide starts. In this module you’ll learn what a futures contract is, what each tick is worth on the most popular contracts, how margin and expiry work, when US futures trade in UK time, and how futures prop firm rules such as trailing drawdown really work.

Everything here is beginner level, in plain English, with worked examples in pounds. You can practise all of it on a free simulator without risking real money.

Why futures first?

• One central market. Futures trade on an exchange, so everyone sees the same prices and the same volume. With spread bets and CFDs, your provider sets the price.
• Clear contract sizes. Each contract has a fixed value per tick, so once you know the numbers, sizing a trade is simple arithmetic.
• It’s what prop firms use. Most prop firms that sell challenges on US markets use futures such as the micro E-mini S&P 500 (MES) and Nasdaq-100 (MNQ).
• But the risks are real. Futures are leveraged, margin calls can close you out, and with a real futures account you can lose more than you deposit. Read the risk warning.

The lessons

1. 1F.1 What are futures? A plain-English introduction – What a futures contract is, who uses futures, how they differ from spread bets and CFDs, and why most prop firms use them.
2. 1F.2 Contract specs and tick values: ES, MES, NQ, MNQ, CL, MCL, GC and MGC – Contract sizes, tick sizes and what each tick is worth, with worked examples in pounds.
3. 1F.3 Micros vs minis: choosing a contract size – Why beginners and prop traders usually start with micro contracts, and how size changes your risk.
4. 1F.4 Futures margin explained – Initial, maintenance and day-trading margin, margin calls, and why a real futures account can lose more than you deposit.
5. 1F.5 Expiry and rollover – Contract months, the front month, roll week, continuous charts and how to avoid expiry surprises.
6. 1F.6 US futures market hours in UK time – The nearly 24-hour CME Globex session, the daily break, the 14:30 US open and the weeks when the clocks change on different dates.
7. 1F.7 Futures volume, the order book and slippage – Why futures volume is real exchange volume, how the order book (DOM) works, and slippage around news.
8. 1F.8 Futures position sizing in ticks – Working out how many contracts to trade from your stop in ticks and your risk in pounds.
9. 1F.9 Futures prop firms explained – Evaluations, monthly fees, activation fees, simulated funded accounts and payouts – how the model works in general.
10. 1F.10 Futures prop rules: trailing drawdown, consistency and contract limits – Intraday vs end-of-day trailing drawdown, consistency rules, contract limits and news rules, with worked examples.
11. 1F.11 Futures platforms and data: NinjaTrader, Tradovate and Rithmic – What a platform, a broker and a data feed are, how they fit together, and the market data fees to expect.
12. 1F.12 Trading futures from the UK: UK vs US brokers – FCA-authorised vs US brokers, what protections you get, W-8BEN forms, currency conversion and the appropriateness test.
13. 1F.13 UK tax on futures (general information) – How futures gains are usually taxed in the UK, why there’s no spread-bet exemption, and how prop payouts differ.

After this module, carry on with Module 2: Brokers, accounts and platforms. Spread bets, CFDs and forex are covered later as an advanced add-on.

Related guides

• Prop challenge prep: how challenges work, the real odds and a written plan.
• Opening range breakout: a strategy popular with futures prop traders.
• The COT report: positioning data from the US futures regulator.
• Glossary: every term used in this module.

Disclaimer: This page is general education, not financial or investment advice or a personal recommendation, and it doesn’t take your circumstances into account. Examples are hypothetical, for illustration only, and not an invitation to buy or sell. Learning to trade doesn’t guarantee profits. Past performance is not a reliable guide to future results. Futures, spread bets and CFDs are complex and carry a high risk of losing money quickly because of leverage, and most retail traders lose money. With a real futures account, losses can exceed your deposit. Prop firm challenges are paid evaluations: the fee is usually lost, and funded accounts are usually simulated. Only trade with money you can afford to lose, and speak to an independent FCA-authorised adviser if you’re unsure. Read our full risk warning.