How to trade futures
The mechanics behind NQ, ES and gold futures — in plain English.
1. Contracts vs micros
A futures contract is a standardized agreement on an index or commodity; day traders simply buy or sell it and close the position later. Each market comes in a full-size "E-mini" contract and a "Micro" that is one-tenth the size. Micros let you scale risk in much smaller steps — important for smaller accounts, where a single full-size contract can be too large for a sensible drawdown budget.
| Contract | Symbol | $ per point | Tick | $ per tick | Notional at index 30,000 / ES 7,500 / gold 4,000* |
|---|---|---|---|---|---|
| E-mini Nasdaq-100 | NQ | $20 | 0.25 | $5.00 | ≈ $600,000 |
| Micro Nasdaq-100 | MNQ | $2 | 0.25 | $0.50 | ≈ $60,000 |
| E-mini S&P 500 | ES | $50 | 0.25 | $12.50 | ≈ $375,000 |
| Micro S&P 500 | MES | $5 | 0.25 | $1.25 | ≈ $37,500 |
| Gold | GC | $100 | 0.10 | $10.00 | ≈ $400,000 |
| Micro Gold | MGC | $10 | 0.10 | $1.00 | ≈ $40,000 |
*Round illustrative index levels (notional = price × $ per point); real prices differ. Example: a 20-point NQ move is 20 × $20 = $400 per NQ, or $40 per MNQ. Micro commissions are usually proportionally higher than full-size, so costs matter more on micros.
2. Margin
Margin is a good-faith deposit, not a down payment and not a cost. The exchange sets initial/maintenance margin; brokers add their own, and many offer lower "intraday" margin for positions closed the same day. Margin changes with volatility — check your broker's current numbers rather than relying on any figure you read online. Two things to remember: (1) margin is not risk — a position can lose far more than the margin posted; (2) being allowed to trade a size doesn't mean you should. Size from your drawdown budget (sizing guide), then make sure margin and your account's excess liquidity can support it through a losing streak.
3. Sessions and trading hours (all times ET)
- Equity index futures (NQ/ES/MNQ/MES): trade nearly 24 hours (Sunday evening to Friday afternoon) on CME Globex with a short daily maintenance break around 5–6 pm. The regular trading hours (RTH) cash-equity session is 9:30 am–4:00 pm.
- Gold (GC/MGC): also near-24-hour on Globex; the COMEX "day session" is roughly 8:20 am–1:30 pm. Our GC strategy trades that window (05:25–10:30 PT, i.e. 08:25–13:30 ET).
- The NQ strategies here enter only between 20 minutes after the open and 14:30 ET and are flat by 16:00 ET. ES B12_01 makes decisions at about 11:00 and 13:00 ET.
- Know your chart's time zone — the strategy documents give times in both ET and PT. Overnight/Globex hours are thinner; news (CPI, jobs, FOMC) can move markets in seconds.
- Check the exchange holiday calendar; early closes change session times.
4. Order types
| Order | What it does | Watch out for |
|---|---|---|
| Market | Fills immediately at the best available price | Slippage, especially in fast markets |
| Limit | Fills only at your price or better | May not fill at all — you can miss the trade |
| Stop (stop-market) | Becomes a market order when price touches the stop | Slippage past the stop level in fast markets |
| Stop-limit | Becomes a limit order at the trigger | May not fill — leaving you unprotected |
| Bracket / OCO | Entry plus linked stop and target; one cancels the other | Make sure your platform handles partial fills |
| Trailing stop | Stop that follows price by a set distance/ATR multiple | Platform trails by ticks, not by ATR — set it per the rules document |
Backtest vs live: the backtests assume entry fills at the close of the entry bar with 4 ticks of slippage. In live trading, how you place the order after the bar closes will change your result. See implementation.
5. Prop-firm accounts vs personal accounts
Personal (broker) account
- Your own capital; real money at risk, real losses
- You set your own risk limits; you pay broker margin, commissions and exchange fees
- No rule set to "pass" — but no safety net either
Prop-firm evaluation / funded
- You pay a fee to attempt an evaluation with firm-set rules, then (if funded) trade under the firm's limits and share profits
- Typical rules: profit target, trailing maximum loss, daily loss limit, sometimes consistency or contract-count limits, and inactivity rules
- Funded stages at some firms are simulated; terms differ widely and change — read them in full
6. Risk basics
- Decide the loss before the trade. Know your stop distance in dollars × contracts.
- Set a daily loss limit and a weekly one, and actually stop.
- Size for drawdown, not for profit. The biggest historical drawdown is not a ceiling — expect a worse one eventually.
- Leverage cuts both ways: small index moves are large dollar swings. Gaps and fast news can jump through stops.
- Costs and slippage are real; micros pay proportionally more commission.
- Correlation: NQ and ES often move together; gold overlaps NQ's morning hours. Two positions can be one bet.
- Risk of ruin: a series of ordinary losses at too-large size can end an account. Smaller size is how you survive to find out whether a strategy works live.
- Taxes and regulation: futures can be taxed differently from stocks; speak to a qualified tax professional in your jurisdiction.
- Start on simulation, then micros, then scale only if live results track the rules.