Futures trading has a language of its own. Whether you’re just getting started or looking to sharpen your skills, this A–Z glossary covers the most important futures terms every trader should know, from trading account basics to asset classes to technical terminology.
A
Ask Price
The lowest price a seller is willing to accept for a futures contract. If you’re placing a market buy order, it gets filled at the current ask.
Auto-Liquidation
When your broker automatically closes open positions because your account balance has fallen below the required margin level. This protects both the trader and the broker from larger losses.
B
Back Month
Any contract month beyond the front month. Often used for longer-term positioning or hedging.
Basis
The difference between the spot price (cash market) of an asset and its corresponding futures price. Basis can help traders understand pricing dynamics and is used heavily in commodity hedging.
Bear Market
A market environment where prices are broadly declining. Futures traders may short contracts to profit in bear markets.
Bid Price
The highest price a buyer is willing to pay for a futures contract. If you’re selling, this is the price you’ll get when placing a market order.
Broker
A licensed intermediary that gives you access to futures markets, executes trades on your behalf, and manages your trading account. MetroTrade is an introducing broker (IB).
Bull Market
A market where prices are generally rising. Futures traders may go long to benefit from upward trends.
C
Candlestick Chart
A type of price chart used by traders to visualize price action over a specific time period. Each candle shows the open, high, low, and close for that time interval.
Clearinghouse
A neutral third party between buyers and sellers in futures markets. It guarantees the performance of all contracts and handles trade settlement and margin calculations.
Commission
A fee charged by brokers for executing a trade. Commissions may be charged per trade, per contract, or bundled into pricing.
Contango
When futures prices are higher than the expected spot price at expiration. Common in commodities with storage costs.
Contract Month
The month a futures contract expires. Also known as the delivery month, it determines when settlement occurs unless the contract is closed or rolled beforehand.
Contract Size
The quantity of the underlying asset that one futures contract represents. For example, one crude oil futures contract equals 1,000 barrels.
Crypto Futures
Futures contracts based on cryptocurrencies such as Bitcoin or Ether. These contracts let traders speculate on crypto prices using leverage, without needing a crypto wallet.
D
Daily Settlement
The process of marking all open positions to market at the end of each trading day, updating your account with unrealized gains or losses.
Day Trading
A trading style where positions are opened and closed within the same day to avoid overnight exposure. Day traders rely on technical analysis and quick decisions.
Delivery
The final settlement of a futures contract. Most retail traders avoid physical delivery by closing or rolling their positions before expiration. Some contracts are cash-settled.
Demo Trading
Practicing futures trading in a risk-free environment using virtual funds. A demo account simulates the real market, letting you trade without putting real money on the line. Ideal for beginners and for getting comfortable with order types, charts, and execution flow.
Depth of Market (DOM)
A real-time display showing current bid and ask sizes at different price levels. Used by active traders to assess liquidity.
Derivative
A financial product whose value is based on an underlying asset. Futures are derivatives based on things like commodities, stock indexes, or interest rates.
E
Energy Futures
Futures contracts based on energy commodities like crude oil, natural gas, gasoline, and heating oil. These markets are known for their liquidity and volatility.
E-mini
A smaller-sized version of a standard futures contract, popular with individual traders. For example, the E-mini S&P 500 (ES) is 1/5 the size of the full-size contract.
Equity Index Futures
Futures contracts based on stock market indexes like the S&P 500, Nasdaq-100, or Dow Jones. These let traders speculate on or hedge broad market movements.
Exchange
A regulated marketplace where futures are traded. Major U.S. exchanges include CME Group and ICE. Exchanges standardize contracts and enforce trading rules.
Expiration Date
The last day a futures contract can be traded before it is settled. Traders often close or roll positions before this date to avoid settlement.
F
Fill
The price at which your order is executed. Fills can be full or partial depending on market conditions.
Flat (or Square)
When you have no open positions — you’re out of the market.
Front Month
The nearest expiration month of a futures contract. The front month is usually the most actively traded and most liquid.
G
GTC (Good-Til-Canceled)
An order that remains open until it is either executed or manually canceled. This type of order does not expire at the end of the trading day.
H
Hedging
A risk management strategy using futures to offset potential losses in another investment or business. For example, farmers hedge grain prices, and airlines hedge fuel costs.
I
Index Futures
Another term for equity index futures. These contracts are tied to the value of a stock index and are used to speculate on or hedge against market movements.
Initial Margin
The minimum amount of capital required to open a futures position. It’s set by the exchange and helps ensure traders have skin in the game.
L
Leverage
The use of margin to control a larger position than your cash balance would otherwise allow. Leverage magnifies both gains and losses.
Limit Order
An order to buy or sell at a specific price or better. Limit orders give you control over the price but may not be filled if the market doesn’t reach your level.
Liquidity
A measure of how easily a contract can be bought or sold without affecting the price. More liquidity generally means faster fills and tighter spreads.
Long Position
Buying a futures contract with the expectation that the price will rise. If the market moves up, the position gains value.
Lot
Another term for a contract or unit of trade. For example, one “lot” of crude oil is one futures contract.
M
Maintenance Margin
The minimum account balance you must maintain to keep a position open. Falling below this level may trigger a margin call.
Margin Call
A broker’s request for more funds when your account drops below the maintenance margin. If you don’t add funds, your position may be liquidated.
Mark to Market
The daily process of adjusting your account balance to reflect unrealized gains or losses based on the latest market price.
Market Order
An order to buy or sell immediately at the best available price. Market orders prioritize execution speed over price.
Metal Futures
Futures contracts for metals like gold, silver, copper, and platinum. Traders use them for speculation, inflation hedging, or exposure to global industrial demand.
O
Open Interest
The total number of outstanding (unsettled) futures contracts in the market. It’s a measure of participation and liquidity.
Order Types
Different instructions for how a trade should be executed. Common types include market, limit, stop, and GTC orders.
P
Paper Trading
The practice of placing hypothetical trades without using real money. Originally done on paper, it now usually refers to demo or simulated trading environments. Paper trading lets you test strategies, track performance, and gain experience without risking capital.
Pip / Tick
In futures, a tick is the smallest price movement a contract can make. Each tick has a defined dollar value (e.g., $12.50 for E-mini S&P 500).
Position
Your current exposure in the market — either long (buy) or short (sell). Closing the position brings you back to flat.
Price Limit
The maximum amount a contract is allowed to rise or fall in a single trading day. Set by the exchange to limit extreme volatility.
Prop Trading (Proprietary Trading)
Trading with a firm’s capital instead of your own. Traders often receive a split of profits but must meet performance and risk controls.
R
Roll Over
The process of closing a soon-to-expire contract and opening a new position in a later month. This allows traders to maintain exposure without taking delivery.
S
Scalping
A short-term trading strategy that aims to capture small price moves, often holding positions for seconds or minutes.
Settlement Price
The official closing price of a futures contract, set by the exchange. Used for daily margin calculations and final settlement.
Short Position
Selling a futures contract first, betting that the price will fall. You profit if the market drops and you can buy back at a lower price.
Simulated Trading
A form of paper trading where you place trades in a mock market environment that mirrors real-time prices and conditions. While no real capital is at risk, simulated trading helps you build trading discipline, test strategies, and track performance under market-like pressure.
Slippage
The difference between the expected price of a trade and the actual fill price, especially during fast-moving markets or large orders.
Speculator
A trader who seeks to profit from price changes, rather than hedging an existing position. Speculators add liquidity to the market.
Stop Order
An order that becomes a market order once a specific price is reached. Often used to limit losses or lock in gains.
Swing Trading
A medium-term strategy where positions are held for several days or weeks to capture price “swings.” Swing traders rely on technical analysis, chart patterns, and market momentum, often trading less frequently than day traders but more actively than long-term investors.
T
Tick Size
The minimum amount by which the price of a futures contract can move. Tick size and tick value vary by contract.
Tick Value
The dollar amount gained or lost for each one-tick move in a futures contract. It’s calculated by multiplying the tick size by the contract’s dollar value per tick. For example, each 0.25-point move in the E-mini S&P 500 is worth $12.50 per contract. Knowing the tick value helps you understand the real-dollar impact of price changes.
Trading Hours
The times during which a futures market is open. Most contracts trade nearly 24 hours a day, Sunday night through Friday afternoon.
Treasury Futures
Futures contracts based on U.S. government debt, including 2-year, 10-year, and 30-year Treasury securities. Used to speculate on or hedge interest rate movements.
V
Volatility
A measure of how much and how quickly prices move. Higher volatility means larger price swings, as well as more opportunity and risk.
W
Watchlist
A personalized list of contracts you’re monitoring. Useful for tracking markets you trade or want to learn more about.
Final Thoughts
Learning to trade futures isn’t just about charts and strategies. It’s about understanding the language that powers the market. From order types to asset classes to trading styles, the terms in this glossary form the foundation for every futures trader’s decision-making.
Whether you’re practicing in a demo account, exploring equity index futures, or placing your first order, having a strong grip on these terms gives you a serious advantage. It helps you interpret market conditions more clearly, avoid costly mistakes, and trade with greater confidence.
At MetroTrade, we believe that futures trading should be accessible, modern, and beginner-friendly. That’s why we built a platform designed to support your entire journey from your first simulated trade to your first live order.
Keep this glossary bookmarked as your personal reference guide, and revisit it anytime you encounter new terminology or need a quick refresher. And if you’re ready to apply what you’ve learned, your free demo account is just a click away.