What Is an Active Futures Contract?

Definition
An active futures contract is the contract with the highest trading volume and liquidity at any given time for a specific asset. It’s usually the contract closest to expiration and is also called the front-month contract.

Understanding Active Contracts

When traders refer to the “active contract,” they’re talking about the one everyone is trading: the one with the most volume, tightest bid-ask spreads, and best liquidity. This contract is typically the one with the nearest expiration date and is where you’ll find the most real-time price discovery.

Some platforms will automatically show you the active contract by default. It’s also what futures charts typically reflect unless you manually change the symbol or expiration.

Why does this matter? Liquidity. The more people trading a contract, the easier it is to get in and out at fair prices.

Which Contract Do Most Futures Traders Use?

Most traders, especially those focused on short-term price moves, stick with the active contract. It offers the most liquidity, which means faster fills, smaller spreads, and less slippage.

That said, some institutional traders and hedgers might use back-month contracts to lock in prices for a specific timeframe. For example, a farmer might use a corn contract expiring in six months to hedge against future price changes.

But for everyday traders and beginners, the active contract is almost always the best place to start. It’s easier to trade, more responsive to real-time market moves, and supported by most charting tools and indicators.

Is Choosing a Futures Expiration Like Picking an Options Expiration?

At first glance, it might seem similar. In both cases, you’re selecting a contract with a specific expiration date. But the reasoning behind it is quite different.

With options, you might choose an expiration based on time decay (theta), implied volatility, or the likelihood of a price move by a certain date. Options can also expire worthless if they’re out of the money.

In futures, you’re not betting on a specific outcome by a deadline. You’re entering into an agreement to buy or sell an asset at a set price. All futures contracts expire, but they don’t have the same “moneyness” considerations as options. You either close the trade before expiration, or the contract settles (by cash or physical delivery).

Traders usually choose a futures expiration based on liquidity, not because of a directional bet tied to a specific date. The goal is to trade where volume is highest, which is why the active (front-month) contract is so commonly used.

Why Liquidity Matters

Active contracts have more trading activity, which leads to:

• Tighter bid-ask spreads: You don’t have to give up as much price to enter or exit

• Faster execution: Your orders are more likely to be filled quickly

• Better price transparency: You’re seeing the most “real” price action in the market

In contrast, back-month contracts (those with later expiration dates) can be thinly traded. That means wider spreads, fewer buyers and sellers, and a higher chance of slippage.

Example: Active Contract in Action

Let’s say you want to trade Micro Nasdaq 100 futures (/MNQ) in late August. The September contract (/MNQU25) is the one expiring next, so it’s the active contract. It has the most volume, the tightest spreads, and the most real-time trading activity.

Even though the December contract is available, it’s not the active one yet. If you traded the December contract, you’d likely face wider spreads and slower fills.

Once September ends, traders will shift focus to the December contract, and that one will become the new active contract.

How the Active Contract Changes

The active contract doesn’t stay the same forever. It rotates.

As expiration nears, traders begin “rolling” into the next contract. During this period, volume gradually shifts from the expiring contract to the next one. Eventually, the newer contract takes over as the most liquid and becomes the new active contract.

The timing of this shift can vary by asset. For example:

• Equity index futures often roll about a week before expiration

• Commodities like crude oil or gold may shift earlier or later depending on the market

• Some traders roll earlier for more stable execution; others wait until closer to expiry

What Is Rolling a Futures Contract?

Rolling means closing out a position in the current month and opening a new one in the next month, usually done to maintain exposure while avoiding expiration.

Example:

You’re long 2 Micro Crude Oil (/MCL) contracts expiring in September. It’s mid-August, and volume is starting to pick up in the October contract. To roll your position, you’d:

• Sell 2 September contracts (to close)

• Buy 2 October contracts (to open)

You’ll pay commissions and fees on both sides, and the price may be different due to factors like supply, demand, or seasonality — a normal part of futures pricing.

Active vs. Back-Month Contracts

In futures trading, contracts are available with different expiration dates. The active contract, often called the front-month, is the one with the most trading activity and the nearest expiration. This is the contract most traders focus on due to its high volume and tight bid-ask spreads.

By contrast, a back-month contract is any futures contract that expires after the front-month contract. These later-dated contracts often have lower trading volume and wider bid-ask spreads, which can make them more difficult to trade efficiently. Because fewer people are buying or selling them at any given time, it may take longer to enter or exit a trade, and you may not get as favorable a price.

Back-month contracts aren’t bad — they can provide insights into market expectations over time. For example, if December crude oil is trading higher than September, that may suggest expectations of rising prices.

But for most traders (especially beginners), sticking to the active contract is the safest and most efficient choice.

How to Tell Which Contract Is Active

Most trading platforms highlight the active contract by default. You can also look for:

• The contract with the highest daily volume

• The nearest expiration (without being too close)

• The one used in major trading charts and technical tools

On MetroTrader, our platform clearly labels the active contract so you can trade with confidence.

Key Takeaway

The active futures contract is where most of the action happens. It’s liquid, efficient, and easier to trade. While you can trade further-out contracts, doing so may come with higher friction and wider spreads.

Before you place your next trade, make sure you know which contract is active. It can make the difference between smooth execution and frustrating slippage.

Trading futures means your gains and losses are calculated every day, even before you close the trade. In the next article, we’ll break down mark to market accounting, how it affects your balance, and what it means for your margin and daily P&L.

Next lesson: What is Mark to Market in Futures? →

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