Futures Mechanics

The process of closing a near-expiration futures contract and opening an equivalent position in the next contract month — required to maintain exposure beyond a single contract's lifecycle.

A reduced margin requirement set by brokers (not exchanges) for positions opened and closed within the same trading session — typically 5-10% of overnight initial margin.

A real-time display of all resting buy and sell limit orders at every price level — the "order book" view that shows market structure and liquidity.

The date a futures contract terminates — at which point all open positions either physically deliver or cash-settle, depending on contract specifications.

The nearest-to-expiration futures contract month with active trading — typically the most liquid contract, where the vast majority of volume and open interest concentrates.

A standardized agreement to buy or sell a specific quantity of an underlying asset at a predetermined price on a specified future date — the foundational instrument of futures markets.

An order to buy at or below a specified price, or sell at or above a specified price — guaranteeing your fill price but not guaranteeing execution.

Exchange-defined daily price boundaries (typically 7%, 13%, 20% for equity index futures) that trigger trading halts when reached — designed to prevent disorderly markets during extreme volatility.

The ease with which a futures contract can be bought or sold without significantly moving the price — measured by trading volume, open interest, and order book depth.

The minimum account equity required to keep an existing futures position open — typically 75-90% of initial margin; falling below triggers a margin call.

The capital deposit required to open and hold a futures position — set by the exchange (initial margin) and broker (day-trade margin), typically 5-15% of contract notional value.

The daily process where futures positions are valued at the current settlement price and unrealized P&L is converted to realized cash flow — the operational core of how futures clearing works.

An order to buy or sell immediately at the best available price — guaranteeing execution but exposing the order to slippage based on order-book depth.

Smaller-sized versions of major futures contracts (typically 1/10th the size of mini futures), designed for retail and prop firm traders to manage risk with less capital.

Mid-sized futures contracts (typically 10x the size of micro futures, 1/5th to 1/10th the size of pit-traded contracts) — the most-traded futures contracts on US exchanges.

A pair of linked orders where executing one automatically cancels the other — used to set a profit target and stop loss simultaneously without holding both as live exposure.

The total number of outstanding (not-yet-closed) futures contracts at a given moment — distinct from volume; measures market participation and sentiment.

The dollar value of a one-point price movement on a futures contract — equal to the contract multiplier; a key input to position sizing math.

The official price set by an exchange at the end of each trading day, used to mark all open positions to market and determine daily P&L for futures contracts.

The difference between the expected price of a trade and the actual fill price — typically larger on market orders, during volatile conditions, and on illiquid contracts.

A conditional order that activates when price reaches a specified trigger level — typically used for stop-losses (sell stops below long entries) or breakout entries (buy stops above resistance).

The smallest price movement allowed on a futures contract — a fixed increment defined by the exchange that determines how prices step up and down.

The dollar value per minimum price movement on a futures contract — multiplying tick value by ticks moved gives your dollar P&L change per contract.

The defined daily windows during which a futures contract is open for trading on the exchange — typically split into Regular Trading Hours (RTH) and Extended/Globex sessions covering near-24-hour cycles.