What Is a Futures Contract?

A futures contract is a standardized agreement to buy or sell something at a set price on a set date. That “something” can be an index, a commodity, a currency, or even just a cash-settled financial product.

What You’re Actually Trading

When you click buy or sell on ES, NQ, MES, or CL, you’re not buying the actual underlying product. You’re trading a **contract** whose price moves with that underlying.

Example: ES (S&P 500 futures) tracks the S&P 500 index. You’re not purchasing all 500 companies — you’re trading a contract tied to its value.

Each Contract Has a Set Size

Every futures contract has a **contract size**, which decides how much each point or tick is worth.

• ES: $50 per point
• MES: $5 per point
• NQ: $20 per point
• MNQ: $2 per point

This never changes. It’s part of the standardized exchange rules.

You’re Trading Price Movements, Not Deliverables

Most modern futures are **cash-settled** and you’ll never see anything delivered to you. No oil, no wheat, no cattle — nothing.

You are simply trading whether price goes up or down.

Expiration and Roll

Every futures contract expires. For index futures like ES/MES and NQ/MNQ, expiration happens quarterly (March, June, September, December).

Traders switch to the next contract early. This is called the **roll**. During roll:

• Volume shifts to the new contract
• Your chart may look jumpy
• Your platform might auto-switch symbols

Why Futures Are Popular

• Low day-trading margin
• Extended trading hours
• Transparent tick sizes
• No PDT rule
• Clean fills compared to stocks
• Clear risk per tick/point

The Bottom Line

A futures contract is just a standardized agreement whose price moves with an underlying market. You’re not buying the S&P 500 — you’re trading a contract tied to it.

Everything else (ticks, margin, volatility, prop firm rules) spin off this basic fact.