Futures Trading Glossary: 40 Terms in Plain English

By CK · Futures trader since 1998

Futures trading terms for beginners, in plain English: 40 words you’ll hear in your first week, grouped the way you’ll actually meet them, from tick and point value to margin, rollover and drawdown. Education only. Futures trading involves substantial risk of loss. Not financial advice.

Prop-firm evaluations and funded accounts are typically simulated. CK Trader Pro and NQ Live Trading aren’t owned, run or endorsed by any prop firm.

The words came before the charts

I’ve been trading futures since 1998. I started as a quant analyst, went into the pits in 2000, and later moved to the screen. And the first thing I had to learn wasn’t a setup. It was the language.

On the floor, if you didn’t know what a word meant, you found out the expensive way. A “tick” wasn’t trivia. A “fill” wasn’t trivia. “Limit” and “stop” were not the same thing, and mixing them up cost real money in real seconds.

The screen didn’t change that. It just made it quieter.

Have you ever noticed this about new traders?

How many traders watch a video that says “the market ran 40 handles off the open,” nod along, and couldn’t tell you what 40 handles costs on one contract?

How many place a “stop” thinking it locks in a maximum loss, without ever hearing the word “slippage”?

And how many sign up for a prop-firm evaluation without knowing whether the drawdown in the rules trails or stays put?

None of that is about a better entry. It’s vocabulary. And vocabulary is the cheapest part of trading to fix, because it only costs you an evening.

How to use this glossary

This is a reference page. You don’t need to memorize it in one sitting. Here’s how I’d use it:

1. Read one section a day. Five sections, five days. Contract basics first, because every other term is measured in ticks and points.
2. Say each term out loud with a dollar amount. “A tick on NQ is $5.” If a definition doesn’t connect to a dollar number or a rule, you don’t really own it yet.
3. Come back when you hear a word you don’t know. In the live room, in a prop firm’s rulebook, on your platform. Bookmark it.

Every dollar example below is an illustration, not a result or a recommendation. For the bigger learning path, start with our futures trading education guide.

Contract basics

These ten terms describe the thing you’re actually trading. If you only learn one section, learn this one.

1. Futures contract. A standardized agreement to buy or sell something at a set price on a future date, listed on an exchange. In day trading, you’re usually not holding to that date. You’re trading the price changes along the way.

2. Underlying. What the contract tracks. For NQ, the underlying is the Nasdaq-100 index (source: CME Group, E-mini Nasdaq-100 contract specs).

3. Symbol (ticker). The short code for a contract. NQ is the E-mini Nasdaq-100. MNQ is the Micro E-mini Nasdaq-100, one-tenth the size of NQ (source: CME Group, Micro E-mini Nasdaq-100 contract specs).

4. Tick. The smallest price move a contract can make. On NQ and MNQ, one tick is 0.25 index points (source: CME Group contract specs, linked above).

5. Tick value. What one tick is worth in dollars, per contract. On NQ it’s $5.00. On MNQ it’s $0.50.

6. Point (handle). One full index point. On NQ and MNQ, four ticks make one point. Traders often say “handle” for a point, as in “40 handles.”

7. Point value (multiplier). What one point is worth per contract. NQ is $20 per point. MNQ is $2 per point. Illustration: a 40-point move is $800 on one NQ and $80 on one MNQ. The free NQ tick value calculator does the math for you.

8. Contract month. Futures are listed for specific months. NQ runs on a quarterly cycle: March, June, September and December, coded H, M, U and Z. “NQZ6” means the December 2026 contract (source: CME Group NQ contract specs).

9. Expiration (last trading day). The day a contract stops trading. NQ stops trading at 9:30 AM ET on the third Friday of its contract month (source: CME Group NQ contract specs, linked above).

10. Rollover. Moving from the expiring contract to the next one. Before expiration, volume shifts to the next month, and many traders switch their charts and orders to follow it. Our guide to NQ trading hours and quarterly rollover goes deeper. Our NQ futures contract specs page covers all ten of these in one place.

Orders and execution

These nine terms describe how your idea becomes a position, and where the price you planned and the price you got can split apart.

11. Bid. The highest price a buyer is currently willing to pay.

12. Ask (offer). The lowest price a seller is currently willing to accept.

13. Spread (bid-ask spread). The gap between the bid and the ask. On a busy contract it’s often one tick, but it can widen in fast or thin markets.

14. Market order. An order to buy or sell right now at the best available price. You get speed. You don’t get a guaranteed price.

15. Limit order. An order to buy or sell at a set price or better. You get price control. You don’t get a guaranteed fill: if the market never trades at your price, nothing happens.

16. Stop order (stop-loss). An order that becomes a market order once a set price trades. Traders use it to exit a losing position. (A stop-limit order becomes a limit order instead, so it may not fill at all in a fast market.) A stop is a plan for an exit, not a promise about the exit price.

17. Bracket order. An entry with a stop and a profit target attached, so both exits are working the moment you’re filled. When one exit fills, the other is canceled.

18. Fill. The price at which your order actually executed. “Filled” means the trade happened. A “partial fill” means only some of your contracts executed.

19. Slippage. The difference between the price you expected and the price you got. It’s common around the 9:30 AM ET open and scheduled news, when price can move many ticks in a second.

Illustration only, not a result or a recommendation. Say a trader plans a 20-point stop on one MNQ: 20 × $2 = $40. If a fast move fills the stop 6 points worse, the loss is 26 × $2 = $52. On one NQ, the same plan is $400 and the slipped fill is $520. No stop guarantees a maximum loss.

Margin and risk terms

These eight terms are where a lot of new traders get the money part wrong. Read them twice.

20. Leverage. Controlling a large dollar position with a much smaller deposit. On NQ, the contract value is $20 times the index, so small point moves are real dollars. Leverage works in both directions.

21. Initial margin. The amount required to open a futures position. CME Group describes margin as “the amount of money that you must deposit and keep on hand with your broker when you open a futures position. It is not a down payment and you do not own the underlying commodity” (source: CME Group, Margin: Know What’s Needed).

22. Maintenance margin. The lower level your account has to stay above while you hold a position. Drop below it and you’ll be asked to add funds. Exchange margins are set by CME, your broker can require more, and both can change, so check your broker’s current numbers.

23. Day-trading margin. A lower amount some brokers allow for positions opened and closed in the same session. It’s a broker policy, not an exchange number, and it varies by broker. A small day-trading margin makes a big position easier to open. It doesn’t make it safer to hold.

24. Margin call. The CFTC defines it as “a request from a brokerage firm to a customer to bring margin deposits up to initial levels” (source: CFTC Glossary). Some brokers may also close positions if margin falls short, so read your broker’s policy.

25. Position size. How many contracts you trade. In my experience, this decision matters more than the entry, because it decides what every point costs you.

26. Risk per trade. The dollars you’re willing to lose if your stop is hit, written down before the trade. The sizing math is simple: contracts = risk in dollars ÷ (stop in points × dollars per point). Illustration: $250 of risk with a 25-point stop on MNQ is 250 ÷ (25 × 2) = 5 MNQ. Slippage can still make the real loss bigger. Our walkthrough on how to size NQ and MNQ trades from your stop shows the full method.

27. Daily stop. Your own rule for when you’re done for the day: a set number of losses or a set dollar amount. It’s different from a prop firm’s daily loss limit (term 37), and in my experience it’s one of the best protections against revenge trading.

If margin and account size still blur together for you, read futures margin vs account size next. It’s the beginner version of this whole section.

Session and market-structure terms

These seven terms describe when NQ trades and why some minutes behave very differently from others.

28. CME Globex. CME Group’s electronic trading platform. NQ trades on Globex from Sunday 6:00 PM ET to Friday 5:00 PM ET (source: CME Group NQ contract specs). Holiday schedules can change those hours.

29. Daily maintenance break. The one-hour pause each weekday from 5:00 to 6:00 PM ET, when NQ doesn’t trade (source: CME Group NQ contract specs, linked above).

30. Overnight session. Trading between the 6:00 PM ET reopen and the next morning. Volume is usually lighter. The overnight high and low often become reference levels at the open.

31. Cash open. 9:30 AM ET, when the U.S. stock market opens. NQ often sees some of the day’s heaviest volume and widest range here, and spreads and slippage can widen. See how to plan the NQ open.

32. Opening range. The high and low of the first minutes after the cash open. Many traders wait for it to form before they act. Our guide to how to trade the opening range explains the idea.

33. Volume. How many contracts traded in a period. Higher volume usually means it’s easier to get in and out near your price. Lower volume can mean wider spreads.

34. Scheduled economic release. A government data release at a known time, like CPI or the jobs report, many of which come out at 8:30 AM ET while NQ is already trading. NQ can move sharply around these. Check the release calendar before you plan your day.

Prop firm terms

These six terms show up in many prop-firm rulebooks. They’re generic here: every firm defines them its own way, and rules change often, so check your firm’s current rules. Our prop firm glossary covers more of them, like buffer, MLL and PA accounts.

35. Evaluation. A paid test of whether you can follow a firm’s rules while reaching a profit target. Evaluation fees are a cost, they’re generally non-refundable, and many evaluations end without a pass. See what a prop firm evaluation is.

36. Maximum drawdown. The floor your balance can’t fall below. Static drawdown is a fixed floor. Trailing drawdown follows your highest balance or equity, either intraday (open profit can raise the floor) or at the end of the day. A trade that runs up and then reverses can breach an intraday trailing account even if it closes flat. See trailing vs end-of-day drawdown, and run your own numbers with the prop firm drawdown calculator.

37. Daily loss limit. The firm’s maximum loss for one day. Hitting it usually ends your day, and at some firms it can end the account.

38. Profit target. The amount you need to reach to pass an evaluation. It’s the finish line of the test, not a forecast of what you’ll make.

39. Consistency rule. A cap some firms put on how much of your total profit can come from one day. Some apply it during the evaluation, some at payout, some both. See prop firm consistency rules.

40. Funded account. The account you move to after qualifying, often with its own rules and payout conditions. Prop-firm funded accounts are typically simulated: your trades usually aren’t sent to the live market. See evaluation vs funded account.

For the whole picture, start with our prop firm information hub and the prop firm education learning path.

Here’s the point

You can’t follow a rule you can’t define.

In my experience, a lot of traders who blow a prop account or a small personal account didn’t lose to a bad setup. They lost to a word they thought they understood: a stop that slipped, a drawdown that trailed, a margin number they mistook for their risk.

The noise talks in shorthand

Here’s what gets in a lot of traders’ way, and it isn’t you. It’s the noise. It talks fast and in shorthand, “40 handles,” “got stopped,” “passed my eval,” and it skips the definitions that tell you what any of that costs. It makes the vocabulary feel like something you’ll pick up later. Later is usually after the expensive lesson.

The CFTC urges people “to be skeptical when promoters… claim that their products and services will earn high profits with minimal risks” (source: CFTC Fraud Advisory). When someone skips the definitions, slow down.

CK has affiliate relationships with some prop firms, including Apex Trader Funding and Lucid Trading, and may earn a commission from sign-ups through his links. That doesn’t change what we teach.

Remember this

Learn the language before you pay the lesson.

Where to learn it step by step

Can learning 40 words make you profitable? No. There’s no guarantee of that, and anyone who says otherwise is selling. What vocabulary can do is make sure you understand what you’re risking, what your orders actually do, and what your rules actually say, before your next session. That’s what I teach.

So here’s my question: without scrolling up, could you explain the difference between a tick and a point, a limit and a stop, and margin and risk, each with a dollar number?

If you’d like to hear these terms used in real time, there’s a free live NQ session on weekdays from 9:30 to 10:30 AM ET at nqlivetrading.com/live, run by the same company. Registration is required. Adults 21+. Sessions are education, not signals.

For the next step after this page, read day trading education and our guide on how to journal futures trades.

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FAQ

What futures trading terms should a beginner learn first?
Start with the contract basics: tick, tick value, point, point value, contract month and rollover. Then learn the order types (market, limit, stop) and slippage, then margin and risk per trade. Every other term is measured in ticks, points and dollars.

What is a tick in futures?
A tick is the smallest price move a contract can make. On NQ and MNQ, a tick is 0.25 index points, worth $5.00 on NQ and $0.50 on MNQ, per CME Group contract specs.

What’s the difference between a tick and a point?
A point is a full index point. On NQ and MNQ, four ticks make one point, so one point is $20 on NQ and $2 on MNQ.

Is margin the same as how much I can lose?
No. Margin is a deposit your broker requires to open and hold a position. Your loss depends on your position size, how far price moves, and your fill, and it can be larger than the margin. No stop guarantees a maximum loss.

What does rollover mean in futures?
Rollover is moving from the expiring contract to the next contract month. NQ is listed for March, June, September and December, and volume shifts to the next contract before the current one expires.

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Trading futures involves substantial risk of loss and is not suitable for everyone. Past performance is not indicative of future results. Education only, not financial advice. All numbers in this article are illustrations, not results or recommendations. No stop guarantees a maximum loss. Prop-firm evaluations and funded accounts are typically simulated. Fees are generally non-refundable, and rules vary by firm and change often. CK Trader Pro and NQ Live Trading aren’t owned, run or endorsed by any prop firm. See our Risk Disclosure and Disclosures. CK Trader Pro is operated by CK TRADING INSTITUTE OF TECHNOLOGY LLC.