What you’ll learn
- What a futures contract is
- How ticks, points, and contract values relate
- Why position size changes exposure
- How to translate a trade plan into dollars at risk
01 · The instrument
What is a futures contract?
A futures contract is a standardized agreement whose price follows an underlying market, such as a stock index, commodity, currency, or interest rate. Traders can take positions that benefit if the price rises or falls, but losses can also develop quickly.
You do not need to memorize every contract specification on day one. You do need to know that each product has its own contract size, price increment, trading schedule, and dollar value.
Never place a futures trade until you understand how that contract converts price movement into dollars.
02 · The language
Ticks, points, and contract values
The smallest price movement allowed for a particular contract.
A larger unit of price movement that may contain multiple ticks.
The dollar effect of a tick or point of movement for one contract.
The number of contracts held. More contracts multiply the position’s exposure.
Contract specifications can change. Traders should verify current product details through the trading platform and applicable exchange before trading.
03 · Exposure
Why leverage matters
Futures let traders control market exposure using less cash than the full value represented by the contract. That is leverage. It can make futures capital-efficient, but it also means a relatively small market move can create a meaningful gain or loss.
More contracts
Increasing contract count increases the effect of each market move.
Wider stop
Allowing more distance between entry and exit generally increases planned risk.
Less buffer
Every loss reduces the amount of room remaining before an account limit.
04 · Worked example
Translate the trade into risk
Imagine a trader plans to enter with two contracts and exit if the market moves five points against the position. Before entering, the trader should calculate:
The same setup with four contracts would have twice the planned exposure of the two-contract setup. Moving the stop farther away would increase it again. The direction of the trade does not change that calculation.
05 · What this means at TradePilot
Visibility supports the decision. It does not make it for you.
TradePilot plans to begin with micro futures such as MES and MNQ. The intended dashboard shows account limits, rule status, and remaining risk capacity so traders can see where they stand.
The trader remains responsible for deciding whether to trade, selecting the market and direction, setting position size, and managing the position.
Knowledge check
Confirm the essentials.
0 of 3 answered
Understanding Prop Firms
Learn what an evaluation company provides, what traders purchase, and how simulated stages work.