Futures Trading Glossary: 32 Terms Every Trader Should Know
Plain-English definitions of the contract specs, order flow concepts, prop firm rules, and risk management terms you'll encounter every day trading ES, NQ and micros.
Contracts & Specs
ESE-mini S&P 500
Electronic mini futures contract on the S&P 500 index. $50 per point multiplier. The most actively traded equity-index futures contract.
NQE-mini Nasdaq 100
Electronic mini futures contract on the Nasdaq 100 index. $20 per point multiplier. More volatile than ES, popular with experienced day traders.
MESMicro E-mini S&P 500
1/10th the size of the ES contract. $5 per point multiplier. Lower margin requirement (~$50) ideal for small accounts and beginners.
MNQMicro E-mini Nasdaq 100
1/10th the size of the NQ contract. $2 per point multiplier. Allows finer position sizing on the Nasdaq.
Tick
The minimum price increment for a futures contract. ES tick = 0.25 ($12.50). NQ tick = 0.25 ($5.00).
Margin
Capital required to hold a futures contract. Day-trading margin is typically a fraction of overnight (initial) margin.
Rollover
The quarterly process of switching from an expiring futures contract month to the next active contract (typically the second Thursday before expiry).
Order Flow & Market Structure
POCPoint of Control
The price level with the highest traded volume in a given session or volume-profile window. A key magnet for price.
VAHValue Area High
The upper boundary of the price range that contained 70% of session volume. Used as a key resistance/support pivot.
VALValue Area Low
The lower boundary of the value area. Often acts as support during trend days.
HVNHigh Volume Node
A price area with concentrated volume on the volume profile, indicating acceptance and frequent price re-tests.
LVNLow Volume Node
A price gap with little traded volume. Price typically moves through LVNs quickly when broken.
VWAPVolume-Weighted Average Price
Running average price weighted by volume, anchored to session open. Often used as intraday fair value.
DOMDepth of Market / Level 2
Real-time order book showing resting bid and ask orders at each price level.
Order Flow
Analysis of executed trades and resting orders (DOM, Time & Sales, footprint, delta) to read short-term supply/demand imbalance.
Footprint Chart
Candle chart variant that shows the volume traded at each price within each bar, split by bid-side and ask-side activity.
Delta
Cumulative difference between volume executed on the ask (buyers) and volume on the bid (sellers). Positive delta = buying pressure.
Slippage
Difference between the expected price of a trade and the actual fill price, common around news or thin liquidity.
Prop Firm Rules
Prop Firm
A firm that funds traders with company capital after they pass an evaluation. Profits are split, typically 80-100% to the trader.
Evaluation / Combine / Challenge
A simulated trading account a trader pays to attempt. Hitting a profit target without violating rules earns a funded account.
Profit Split
The percentage of net profits a trader keeps after a prop firm payout. Typical range: 80-100%.
Scaling Plan
Prop firm rule set that increases position-size or account-size as a trader demonstrates consistent profitability.
Consistency Rule
Prop firm rule that prevents a single day's profit from exceeding a defined percentage of total profits (e.g. 30%).
Funded Account
A live account provided by a prop firm after passing the evaluation. Profits are paid via a payout cycle (typically bi-weekly or monthly).
Pattern Day Trader (PDT)
U.S. SEC rule requiring stock day traders to maintain $25,000 in equity. Does NOT apply to futures, which is why many under-capitalized traders trade ES/NQ instead.
Risk Management & Drawdown
Trailing Drawdown
A max-loss limit that rises with new account highs and locks in profits. Used by Apex and TopStep.
Static Drawdown
A fixed max-loss limit relative to the starting balance. Does not move with profits. Used by FTMO.
EOD Drawdown
End-of-day trailing drawdown that only re-anchors at market close, giving more intraday flexibility than real-time trailing.
Daily Loss Limit
The maximum loss allowed in a single trading day. Hitting it usually closes the account or pauses trading until the next session.
Reward-to-Risk (R:R)
Ratio of potential reward to defined risk on a trade. A 1:2 R:R means risking 1 unit to make 2 units.
Position Sizing
Calculating how many contracts to trade based on account risk and stop distance: (account risk $) / (stop in ticks × tick value).
Liquidation
Forced closure of a position when margin or drawdown rules are breached. Triggered automatically by broker/prop firm.
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