(This post was updated March 20, 2023.)
Futures are derivatives that track products like the S&P 500, crude oil, Treasury bonds and gold.
Traders use futures to position for rallies and drops, with the ability to place orders most times of the day. These extended trading hours are a key reason why many customers use futures. They can be useful when news events occur before 9:30 a.m. ET or after 4 p.m. Examples may include non-farm payroll reports or OPEC meetings.
Futures tracking stock indexes like the S&P 500 and Nasdaq-100 are the most active among retail investors. Given their popularity, CME has created smaller versions known as “Micros,” which are one-tenth the size of e-mini contracts.
Futures are also different from stocks and exchange-traded funds (ETFs) because of margin requirements. Customers seeking more information about TradeStation’s margin rates can find it here.
Another difference is that various futures have different expiration schedules. Stock futures like the S&P 500 e-minis expire quarterly, while crude oil has a new contract each month. Customers should thoroughly understand these details before trading futures.
The symbol for futures contracts have three components:
- Root: The main symbol for the product
- Expiration month letter code (see table on right)
- Expiration year (last two digits).
For example, the March 2023 e-mini S&P 500 futures contract is “ESH23.”
- Root: “ES.”
- Month: March’s letter is H
- Year: The year is “23”
Note: TradeStation offers permanent, or “generic” symbols for major futures contracts. These allow long-term charting and analysis. However traders looking to place orders need to use the symbol for a specific month.
The tables below provide some contract specifications for liquid futures contracts.
Top Futures Contracts for Stock Indexes
|Product (w/generic symbol)||Current|
|S&P 500 E-Mini (@ES)||ESM23 (June)||6/16/23||ESU23 (September)|
|*Micro S&P500E-Mini (@MES)||MESM23(June)||6/16/23||MESU23 (September)|
|Nasdaq-100 E-Mini (@NQ)||NQM23 (June)||6/16/23||NQU23 (September)|
|*Micro Nasdaq-100E-Mini (@MNQ)||MNQM23(June)||6/16/23||MNQU23 (September)|
|Dow Jones E-Mini (@YM)||YMM23 (June)||6/16/23||YMU23 (September)|
|*Micro Dow Jones E-Mini (@MYM)||MYMM23 (June)||6/16/23||MYMU23 (September)|
|Russell 2000 E-Mini (@RTY)||RTYM23 (June)||6/16/23||RTYU23 (September)|
|*Micro Russell 2000 E-Mini (@M2K)||M2KM23 (June)||6/16/23||M2KU23 (September)|
Top Futures Contracts for Energy
|Product (w/generic symbol)||Current|
|Crude oil (@CL)||CLK23 (May)||4/20/23||CLM23 (June)|
|*Micro crude oil (@MCL)||MCLK23 (May)||4/19/23||MCLM23 (June)|
|Natural gas (@NG)||NGK23 (May)||4/26/23||NGM23 (June)|
Note: The month for energy futures is based on their delivery date rather than their expiration.
Futures Trading Platforms
Today’s brokerage industry offers a wide range of platforms for futures traders. Some of these support complex trading strategies. Others may cater to day traders.
TradeStation’s award-winning desktop platform was developed for advanced futures trading. Its tools help customers perform technical analysis, program stop-loss orders and manage position sizing. Trading strategies can also be back tested and automated. Our web-based and mobile platforms provide more flexibility for traders away from their desks.
Simulated trading accounts are another feature to consider because they let futures traders practice using a platform before risking real money.
Risk Management with Futures
Many investors use futures for risk management because they provide scalable exposure to the broader market. Portfolio managers can position for rallies or declines in major indexes like the S&P 500 or Nasdaq-100. This automatic diversification is one of the potential benefits of futures.
Market Analysis for Futures
Futures traders may analyze the market in various ways. Some may use indicators and chart studies to detect patterns in the price action. This is known as technical analysis.
Investors can also assess the market with fundamental analysis. This approach considers factors like corporate earnings, interest rates and economic data.
Security futures are not suitable for all investors. To obtain a copy of the security futures risk disclosure statement Investment and Trading Disclosures Booklet – Futures.
Margin trading involves risks, and it is important that you fully understand those risks before trading on margin. The Margin Disclosure Statement outlines many of those risks, including that you can lose more funds than you deposit in your margin account; your brokerage firm can force the sale of securities in your account; your brokerage firm can sell your securities without contacting you; and you are not entitled to an extension of time on a margin call. Review the Margin Disclosure Statement.