Futures & Derivatives

About this track

Contracts, margin, contango and hedging — the trader's toolkit.

A ground-up guide to exchange-listed futures — how contracts are specified, how margin actually works, why term-structure matters, and how hedgers and speculators interact on the CME.

What you will be able to do

• Explain what a futures contract standardises and who the natural counterparties in a market are.
• Calculate the notional value behind a contract and the margin actually required to hold it.
• Read a term structure and say whether a market is in contango or backwardation, and what that implies for anyone holding a rolling position.
• Describe how a producer or consumer uses futures to hedge a real-world exposure.
• Compare contract multipliers and notional exposure against a stated hypothetical account value; smaller contracts still carry leveraged risk.

Before you start

Some familiarity with charts and with the idea of buying and selling an asset. The margin lesson involves multiplication and percentages, nothing more. The Trading Decisions and Behaviour track offers optional exercises for recording assumptions. No lesson establishes a suitable real-money contract size or leverage level.

How the lessons build

The sequence starts with contract specifications, then margin and leverage. Term structure follows to explain differences between delivery prices and rolling exposure. Hedging introduces basis risk, and micro contracts illustrate smaller multipliers. No contract size is universally suitable, and losses are not limited to the margin deposit.

Who this track is not for

This track does not teach day-trading systems, scalping methods or any approach that relies on high leverage to produce results. It does not cover crypto perpetual contracts, which have different funding mechanics. High notional exposure relative to account equity magnifies losses; this track does not establish a measured survival rate or a suitable real-money leverage level.

Lessons in this track

• What Is a Futures Contract? (8 min) — A futures contract is a standardised, exchange-traded agreement to buy or sell a fixed quantity of an asset at a set price on a set future date.
• Margin & Leverage in Futures (8 min) — Futures margin is collateral for contract obligations. Losses and variation-margin demands can exceed an initial margin deposit.
• Contango & Backwardation — Term Structure Explained (9 min) — Compare prices across delivery dates and study carrying costs, supply conditions and the assumptions behind rolling exposure.
• Hedging with Futures — The Original Use Case (8 min) — Hedging is one use of futures. Airlines may hedge fuel, producers may hedge output, and funds may hedge equity beta.
• Micro Futures — Contract Size and Risk (7 min) — Compare Micro E-mini equity-index contracts with their E-mini counterparts, while checking each product’s specifications and risks.

Completion badge

Futures Fundamentals Completion: Awarded after completing every lesson in the Futures & Derivatives track. Educational simulation only — not financial advice.