Set 1 — Futures Contract Basics

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futures

Last updated 6:36 PM on 4/12/26
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25 Terms

1
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What is a futures contract?
A standardized agreement to buy or sell an asset at a set price at a future date, traded on an exchange.
2
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What is MES?
Micro E-mini S&P 500 futures contract.
3
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What is ES?
E-mini S&P 500 futures contract.
4
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How is MES related to ES?
MES is 1/10 the size of ES.
5
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What is the MES contract multiplier?
$5 times the S&P 500 index.
6
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What is the ES contract multiplier?
$50 times the S&P 500 index.
7
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What is the minimum tick size for MES and ES?
0.25 index points.
8
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What is 1 tick worth in MES?
$1.25 per contract.
9
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What is 1 point worth in MES?
$5 per contract.
10
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What is 1 tick worth in ES?
$12.50 per contract.
11
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What is 1 point worth in ES?
$50 per contract.
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How many ticks are in 1 point in MES or ES?
4 ticks.
13
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If MES moves 10 points, how much is that per contract?
$50.
14
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If ES moves 10 points, how much is that per contract?
$500.
15
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What is the front-month contract?
The contract month with the most active trading and volume, usually the one traders focus on.
16
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What is contract expiration?
The date the futures contract stops trading and is settled or rolled.
17
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What does it mean to roll a contract?
Closing the current contract month and switching to the next active one.
18
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What is notional value?
The total market exposure of the contract, not the small margin posted to open it.
19
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What is margin?
The amount required to open and maintain a futures position.
20
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Why is margin not the same as risk?
Margin is only the deposit required to trade; real risk depends on stop size, volatility, and contract value.
21
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Why can one contract still be too big even if margin looks small?
Because price moves are magnified by the contract multiplier, so losses can grow quickly.
22
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Why are micros useful for beginners?
They let traders practice real futures execution with smaller dollar swings.
23
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What does leverage do?
It increases exposure and can magnify both gains and losses.
24
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Why is ES usually riskier than MES for a beginner?
Because each point and tick is worth much more in ES.
25
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What should you memorize before trading MES or ES?
Tick size, tick value, point value, contract size, and dollar risk per stop distance.