Beginner
What a futures contract commits you to
A futures position creates an obligation whose value changes with an underlying market. Begin by separating the contract from the cash deposited to support it.
Read articleFOLITIC / FUTURES TRADING GUIDE
Futures Trading Guide
Understand futures contracts, read market structure and build strategies for direction, relative value and hedging. Follow ten stages from contract basics to advanced research and disciplined risk management.
Start with What a futures contract commits you to, then follow the next lesson links. Explore 40 lessons with worked examples, exercises and further reading.
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Futures Foundations
Understand the contract, its price units and the obligations on both sides.
Beginner
Contract size ticks and notional exposure
A small price movement can create a large cash result. Contract units, tick size and the multiplier explain the difference.
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Beginner
Long and short futures profit and loss
Futures gains and losses depend on price direction, the multiplier and quantity. A short sale is not an upfront receipt of the full contract value.
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Beginner
Choosing a futures market and contract month
The most familiar underlying is not necessarily the most suitable contract. Compare size, liquidity, trading hours and settlement before choosing a market.
Read articleMargin and Contract Lifecycle
Follow collateral, daily cash flows, expiration and the roll into a new contract.
Beginner
Initial margin maintenance margin and daily cash flows
Futures collateral is a performance bond, while price changes create cash gains or losses. A viable trade must survive both the market move and the funding...
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Beginner
Why low intraday margin does not mean low risk
An intraday collateral concession changes funding access, not the size of a contract’s price risk. Position size must be decided independently.
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Beginner
Expiration delivery and final settlement
Expiration is a process with several deadlines. The last charted trading day may not be the date by which your broker requires a position to be...
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Beginner
Rolling futures without confusing the price gap with profit
Rolling closes one maturity and opens another. The difference between their prices is a spread, not an instant trading profit or loss by itself.
Read articleReading Futures Markets
Connect curves, positioning, economic releases and price behaviour.
Intermediate
Reading contango backwardation and the futures curve
A futures curve compares maturities at one moment. Its shape is different from a chart showing one contract through time.
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Intermediate
Volume open interest and positioning reports
Trading activity and outstanding positions answer different questions. Neither reveals another trader’s full intention on its own.
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Intermediate
Building a futures macro and supply calendar
A trading calendar is most useful when each release is linked to the contract’s economic exposure and your intended holding period.
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Intermediate
Price structure volatility and volume weighted averages
Charts can organise price behaviour, but indicators are transformations of data rather than independent guarantees. Define the calculation and the decision it supports.
Read articleOrders and Execution
Translate a trading idea into orders that account for liquidity, costs and operational limits.
Intermediate
Market limit stop and stop limit orders
Order instructions decide which tradeoffs you accept between price and execution. A protective order is only useful when its actual behaviour is understood.
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Intermediate
Bid ask spread slippage and the cost of a round trip
A strategy must pay for entering and leaving the market. Small theoretical advantages can disappear after spreads, fees and imperfect fills.
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Intermediate
Order books sessions and liquidity around announcements
Displayed depth is a snapshot of available interest, not a commitment that will remain while an order travels to the exchange.
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Intermediate
Trading a spread as one order or separate legs
A spread can be executed as a recognised combination or assembled one leg at a time. The choice affects exposure while the trade is being established.
Read articleDirectional Strategies
Build and test rules for trends, breakouts, reversals and scheduled events.
Intermediate
Trend following with defined entry and exit rules
A trend method turns persistent price movement into a set of testable decisions. The rules must explain entries, exits and exposure before the next chart is...
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Intermediate
Breakouts false breaks and opening range rules
A breakout needs a defined boundary and a plan for failure. A dramatic candle alone is not an executable trading method.
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Intermediate
Mean reversion without assuming every dip will recover
Mean reversion assumes a temporary departure from a reference level. It requires evidence and an exit rule for the times when the market is repricing permanently.
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Intermediate
Trading scheduled events and overnight gaps
An announcement changes both information and the conditions for execution. Plan the exposure through the event before trying to interpret its headline.
Read articleSpreads and Relative Value
Study relationships between maturities, commodities and financial contracts.
Advanced
Calendar spreads and changing term structure
A calendar spread trades the relationship between two maturities. Its risk comes from changes in that relationship rather than the outright market alone.
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Advanced
Intercommodity spreads and matching economic units
Related markets do not necessarily have matching units or risk. An intercommodity spread begins with the economic relationship and a defensible ratio.
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Advanced
Crack and crush spreads from inputs to outputs
Processing spreads compare the value of outputs with the cost of inputs. They describe a gross relationship, not the processor’s final profit.
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Advanced
Equity index and interest rate relative value
Relative value across equity indices or interest rate contracts requires a measure of the exposure being matched. Equal contract counts rarely answer that question.
Read articleHedging Real Exposures
Use futures to manage stock, commodity, currency and interest rate exposures.
Advanced
Hedging a stock portfolio with index futures
Index futures can reduce a portfolio’s broad market exposure without selling every holding. The hedge is an estimate whose effectiveness must be measured.
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Advanced
Producer and consumer commodity hedges
A producer and a consumer face opposite cash price risks. Futures can offset part of those risks while leaving local basis and quantity uncertainty.
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Advanced
Hedging foreign currency receipts and payments
A future foreign currency receipt or payment creates an exchange rate exposure. Correct hedge direction depends on both the cash flow and the contract quotation.
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Advanced
Interest rate hedges duration and basis risk
A bond portfolio’s rate exposure is better described by sensitivity than by face value alone. A futures hedge must account for the contract’s own changing sensitivity.
Read articleTrading Across Asset Classes
Adapt the process to equity indices, rates, currencies, commodities and digital assets.
Advanced
Equity index futures from micros to overnight exposure
Equity index futures trade an index exposure rather than ownership of its shares. Smaller contract sizes improve granularity but do not remove leverage.
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Advanced
Currency and rate futures quoting conventions
Similar looking price changes can represent very different exposures in currency, short rate and bond futures. Read the quote before forming a direction view.
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Advanced
Energy metals and agricultural contract differences
A commodity name does not identify a complete deliverable. Location, grade, quotation units and seasonal constraints shape the risk of each contract.
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Advanced
Crypto futures and perpetual contracts are different
Crypto derivatives include contracts with scheduled settlement and products that continue through funding payments. Their names alone do not establish comparable protections.
Read articleCapital and Portfolio Risk
Size positions, stress cash needs and manage concentrated exposures.
Advanced
Position sizing from stop distance and account risk
Position size should connect the trading idea to the cash that can be lost. Exchange margin answers a different question from an account risk allowance.
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Advanced
Stress testing gaps margin increases and cash reserves
A sound plan must survive a cash demand, not just a chart drawdown. Stress tests combine price losses, changed collateral requirements and impaired exits.
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Advanced
Correlation concentration and portfolio exposure
Diversification depends on common drivers rather than the number of symbols. Futures portfolios can hide a concentrated exposure behind several different contracts.
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Advanced
Drawdown limits losing streaks and trading discipline
Drawdown controls protect the ability to continue evaluating a method. They work best when they are written before losses create pressure to improvise.
Read articleResearch and Trade Management
Test ideas honestly, manage open trades and build a repeatable decision process.
Advanced
Testing futures strategies with realistic contract data
A continuous chart is a research construction. Testing a futures strategy requires knowing which contract could actually have been traded at each decision.
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Advanced
Walk forward testing expectancy and overfitting
A promising historical result is a hypothesis. Testing it on data that did not choose the rules helps reveal how much of the apparent edge may...
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Advanced
Managing exits scaling and the decision to roll
Entry rules are only part of a strategy. Exits, quantity changes and rolls determine how the initial idea becomes an actual account result.
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Advanced
Building a complete futures trading plan
A complete plan connects research, contract knowledge, execution and cash controls. Its value is that another person could understand the decisions before seeing the result.
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