A futures contract is a standardized agreement traded on an exchange to buy or sell exposure to an underlying market at a future date. Most active traders close or roll positions before expiration rather than making or taking delivery.
| Core idea | Standardized exchange-traded contract |
|---|---|
| Pricing | Points and ticks |
| Risk | Leveraged; losses can exceed margin |
How it works
A buyer profits from favorable upward movement; a seller profits from favorable downward movement. The exchange clearing system marks positions to market.
- Define the contract and expiration month
- Convert the price move into points and ticks
- Multiply by the contract's verified point or tick value
- Account for fees, liquidity, and risk limits
Worked example
Futures standardize the product, quantity, expiration, and settlement method. A two-contract position moving 10 ticks changes by 20 total contract-ticks. The dollar result equals those contract-ticks multiplied by the product's tick value.
Risk and common mistakes
Leverage makes small price changes meaningful. Know the tick value, daily limits, and settlement process before trading.
- Confusing margin with maximum possible loss
- Using the wrong micro or E-mini multiplier
- Ignoring expiration, maintenance breaks, or economic events
- Sizing from desired profit instead of predefined risk
Use the related calculator
Model the contract values and risk with your own inputs before planning a simulated trade.
Open calculator →Frequently asked questions
What is the most important point about what are futures?+
A futures contract is a standardized agreement traded on an exchange to buy or sell exposure to an underlying market at a future date. Most active traders close or roll positions before expiration rather than making or taking delivery.
Is this information personalized financial advice?+
No. ORIVECT Education provides general educational information. Contract selection, leverage, and risk decisions require your own judgment and current official documentation.
Where can I verify the current contract specification?+
Use the official exchange source linked from the relevant ORIVECT market reference page. Trading hours, margin, and holiday schedules can change.