Futures has its own language, and it throws off plenty of traders coming from stocks or forex. The good news is that most of the jargon describes the same handful of mechanics: what a contract is, how small it can move, what it costs to hold, and when it ends. Once those click, charts and strategies read the same as any other market. This glossary groups the core terms by theme and keeps each definition short, with the prop-trading angle noted where it matters.
A note on scope: this is a futures-focused glossary. Forex terms like pip and lot are covered separately, though leverage, margin, and a few others appear in both worlds.
Contract Basics
Futures contract. A standardized agreement to buy or sell something, an index, a commodity, a currency, at a set price on a future date. In practice you’re trading the price movement, not taking delivery of barrels of oil or bushels of wheat.
Underlying. The asset a contract is based on, such as the S&P 500 index for the E-mini S&P, or crude oil for the CL contract.
Contract size. The standardized quantity one contract represents. It’s fixed by the exchange, so everyone trading that market works from the same unit.
Point value. The dollar value of a one-point move in the contract’s price. For the E-mini S&P 500, one full index point is worth $50 per contract.
Expiration date. The date a contract stops trading and settles. Each market lists contracts for specific months, so a single market has several contracts trading at once.
Roll (rollover). Moving a position from a contract that’s about to expire into the next month’s contract, so you keep the exposure without being caught at expiration.
Front month. The nearest expiring contract, usually the most actively traded and most liquid, with the tightest spreads.
Settlement. How a contract closes out at expiration, either cash-settled (a cash payment based on the final price, common for index futures) or physically delivered (the actual commodity changes hands, which most retail traders avoid by rolling or closing first).
Price and Movement
Tick. The smallest price increment a contract can move. For the E-mini S&P 500, the tick is 0.25 index points.
Tick value. The dollar amount of one tick. For the E-mini S&P 500, one tick is worth $12.50 per contract, so every tick changes your profit or loss by that amount. Knowing your tick value is how you size a position and plan risk before entering.
Point. A full one-unit move in price, made up of multiple ticks. Four ticks of 0.25 make one point on the E-mini S&P 500, worth $50.
Volume. The number of contracts traded in a period. Higher volume means more participation and stronger confirmation behind a move.
Open interest. The number of contracts still open and not yet closed or settled. Rising open interest suggests traders are adding positions; falling open interest suggests they’re exiting. It’s distinct from volume, which counts trades rather than open positions.
Limit move. A price move large enough to hit an exchange-imposed daily price limit, which can pause or cap trading in that contract for a period.
Margin and Leverage
Margin. The deposit required to open and hold a futures position. It isn’t a down payment but a good-faith performance bond that keeps the position active.
Initial margin. The amount needed to open a position, set by the exchange and sometimes raised by the broker.
Maintenance margin. The minimum equity you must keep to hold the position. Drop below it and you face a margin call to add funds or reduce size.
Day-trading margin. A reduced margin some brokers allow for positions opened and closed within the same session, lower than the overnight initial margin.
Leverage. The ability to control a large contract value with a relatively small margin deposit. It’s a core reason traders choose futures, and it magnifies gains and losses alike.
Margin call. A demand to restore your account to the required margin level, by adding funds or closing positions, when losses pull it too low.
Contract Types and Symbols
E-mini. A mid-sized stock-index contract, the most widely traded being the E-mini S&P 500 (ES). E-minis opened index futures to a far wider pool of traders than the original large contracts.
Micro (E-micro). A contract one-tenth the size of the E-mini, such as the Micro E-mini S&P 500 (MES). The tick increments match the E-mini but the dollar value is one-tenth, so the Micro E-mini’s tick is $1.25 versus $12.50.
Common symbols. Markets are identified by root symbols: ES (E-mini S&P 500), NQ (E-mini Nasdaq 100), CL (crude oil), GC (gold), and so on. A contract code also carries a month and year, so everyone references the same specific contract.
Contango. A market where contracts for later months trade higher than nearer ones, often reflecting the cost of carry.
Backwardation. The opposite of contango, where later-month contracts trade lower than nearer ones.
Chart and Trading Terms
Long. A position that buys to profit if the price rises.
Short. A position that sells first to profit if the price falls. Futures make going short as straightforward as going long.
Support. A price level where buying has tended to slow or stop a fall, acting as a floor.
Resistance. A price level where selling has tended to cap a rise, acting as a ceiling. Futures traders lean on support and resistance to plan entries, exits, and stops.
Trading session. The window a market is open. Most futures trade nearly around the clock, with activity clustering in the Asian, European, and US sessions.
Drawdown. The drop from a peak in account value to a low. In a futures prop account, the trailing drawdown is the loss threshold that ends an evaluation if breached.
Why These Terms Matter in a Prop Account
Futures prop firms run on this vocabulary, and a few terms do most of the work in an evaluation. Tick value sets how much each price increment moves your profit and loss, which drives position sizing against your daily loss limit and drawdown. Contract size and the choice between a standard E-mini and a Micro contract decide how much risk a single trade carries, since a Micro lets you scale exposure down to a tenth. Margin works differently too: many firms don’t require you to post margin at all in a simulated evaluation, so the binding constraint becomes the firm’s risk rules rather than a broker margin call. Getting comfortable with tick value, contract size, and expiration early makes the rest of an evaluation far less mysterious.
Bottom Line
Futures terminology sounds technical, but it boils down to a few mechanics: a contract is a standardized agreement with a set size and expiration, it moves in ticks worth a fixed dollar amount, margin is the bond that holds the position open, and leverage is what makes a small deposit control a large value. Learn tick value and contract size first, because they decide your risk per trade, then layer in expiration, margin, and the chart terms. In a prop account those same fundamentals, especially tick value and contract choice, are what keep you on the right side of the rules.
Frequently Asked Questions
What is a tick in futures trading?
A tick is the smallest amount a futures contract’s price can move, and tick value is the dollar amount of that move. For the E-mini S&P 500, the tick is 0.25 points worth $12.50 per contract, so tick value is how you measure risk and size a position.
What’s the difference between a tick and a point?
A point is a full one-unit move in price, made up of several ticks. On the E-mini S&P 500, four 0.25 ticks make one point, so one point equals $50 per contract while one tick equals $12.50.
What is margin in futures, and is it the same as a down payment?
No. Futures margin is a performance bond, a deposit that keeps your position active rather than a partial payment for an asset. There’s an initial margin to open a trade and a maintenance margin you must keep to hold it.
What’s the difference between an E-mini and a Micro contract?
A Micro contract is one-tenth the size of the corresponding E-mini. The tick increments are the same, but the dollar value is a tenth, so the Micro E-mini S&P 500 tick is $1.25 versus the E-mini’s $12.50. Micros let you trade the same market with smaller risk.
Do I need to post margin in a futures prop evaluation?
Often not. Many futures prop firms run simulated evaluations where you don’t post margin to trade, so the real constraint is the firm’s daily loss limit and drawdown rather than a broker margin call. Always check the specific firm’s rules.