Home › Market News › Futures Trading Terminology Explained: Key Terms Every Beginner Should Know
Futures can seem intimidating even for traders who’ve already been around the markets. If you’ve traded stocks or forex, stepping into futures can feel like switching languages. But at their core, the same skills apply. The indicators, chart patterns, and psychology all carry over. Futures just show the market through a slightly different lens.
A big part of that intimidation comes from the terminology. Words like contract size, tick value, and margin can sound complex, but they’re really just the mechanics behind how futures work.
This reference guide breaks down some of the common futures terms you’ll see in charts, on trading platforms, or in discussions, so you can trade confidently without getting lost in the jargon.
A futures contract is simply an agreement to buy or sell something at a set price in the future. That “something” could be oil, gold, or a market index like the S&P 500. You’re not buying or storing physical goods (no one’s backing a truck up to your house with 25,000 bushels of wheat). You’re simply trading price movements, just like in any other market.
Each contract has a standardized size and expiration date, meaning everyone trading that market is working from the same playbook. That structure is what keeps the futures market efficient and transparent. Once you understand how these contracts move, the rest – price action, patterns, and indicators – work just like any other market. The difference is that you can start at a higher level of structure, build discipline, and grow your trading skill one decision at a time. For a quick, flexible intro to why more traders are choosing futures, read “What is Futures Trading?”
Tick Size and Tick Value
Every futures market moves in small increments called ticks. Each tick has a set dollar value. For example, if a contract’s tick value is $12.50, every tick up or down changes your profit or loss by that amount. Knowing your tick value helps you plan position size and manage risk before you ever enter the trade.
Margin in Trading
Margin in futures is the amount of money you need to open a trade. It’s not a down payment; it’s more like a performance bond that keeps your position active. At Topstep, you don’t need to post margin to start trading. You learn how to manage it safely in simulation before going live.
Futures Expiration Date
Every futures contract has an expiration date. Traders can roll to the next month’s contract before it does, so you’re never stuck with something you didn’t mean to buy.
Leverage in Trading
Leverage lets you control a large amount of value with a relatively small amount of capital. It’s one of the biggest reasons traders move to futures, but it magnifies both profits and losses.
Trading Futures: Chart Terms
Once you understand how futures contracts work, the next step is learning what you’re seeing in the charts. Futures charts show real-time price movement, volume, and open interest – all essential for spotting opportunities and managing risk.
Price Movement
Price movement is simply how the market reacts to buying and selling pressure. Each candle or bar on your chart shows where the market opened, where it closed, and how far it moved within that period.
Volume in Trading
Volume shows how many contracts were traded during a specific period. High volume means more participation and stronger confirmation of a move.
Open Interest
Open interest tracks how many contracts are still active, not closed or settled. It helps you see whether traders are adding to positions or exiting them.
Support and Resistance in Trading
These are price levels where markets tend to pause or reverse. Support acts as a floor, resistance as a ceiling. Futures traders use these levels to plan entries, exits, and stop placements.
If you’re starting to explore trading futures and want a deeper understanding of what you’re seeing in the charts (price movement, volume, open interest, and more), check out Coach Hoag’s Futures 101 series. It breaks down how futures contracts actually work, why they move the way they do, and how traders use them to find opportunity in every market condition.
You don’t need $25,000 to start learning to trade futures. With a prop firm like Topstep, you can develop your skills and work toward funding through a structured, rules-based program built for traders at every level. Futures used to feel exclusive, something only institutions and pit traders had access to, but those days are long gone.
And with Topstep, you don’t even need $1,000 to access the same markets once limited to the pros. Now, every trader can build skill, apply discipline, and take advantage of futures’ flexibility with a prop firm that helps you get funded and stay funded.
The terms may be technical, but mastering them is the first step to trading with confidence. The next step? Putting that knowledge to work with structure, discipline, and a clear path forward.
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Futures are standardized agreements to buy or sell an asset at a future date, unlike stocks or options. Their structure, margin requirements, and nearly 24-hour trading sessions make futures a favorite among active traders.
The current price reflects the most recent trade during the active trading day. It shows where buyers and sellers are agreeing on value at that moment and is essential for managing risk, planning entries, and evaluating open positions.
High trading volume typically indicates strong participation and adds credibility to market moves. Low volume can suggest uncertainty or weaker conviction, especially during lighter trading sessions such as overnight hours.
A trading session refers to an active window when futures markets are open. Because most futures trade nearly 24 hours a day, sessions often align with global market activity, such as the Asian, European, and U.S. sessions.
Knowing terms like initial margin, tick value, current price, and volume of trading helps new traders interpret charts, manage risk effectively, and make informed decisions throughout each trading session.
