Complete Guide to US Stock Futures Trading: From Zero to Practical Selection

Want to trade US stock futures but don’t know where to start? Actually, US stock futures are not as complicated as they seem. The core idea is to use a smaller margin to control a larger stock index value. This article will clarify all the key information for you.

What exactly are US stock futures?

The essence of US stock futures is simple: a contract that promises to trade a certain index at a fixed price at a future date.

For example, if you buy a crude oil futures contract now at $80 that expires in 3 months, you’re committing to buy 1,000 barrels of oil at that price in 3 months. If the oil price rises to $90, your contract becomes more valuable.

Applying the same logic to US stock futures, you’re not trading oil but an index composed of a basket of stocks. For instance, buying Nasdaq 100 futures (symbol MNQ) is essentially buying a portfolio of 100 tech stocks.

Here’s a key concept to understand: Nominal value.

Index points × Multiplier = Actual dollar value represented

For example, if Nasdaq 100 is at 12,800 points, and MNQ’s multiplier is $2, then the contract’s represented stock value is: 12,800 × 2 = $25,600

This means you can control stocks worth over $20,000 with just a few thousand dollars in margin. That’s the power of leverage.

What are US stock futures used for? Three main scenarios

Hedging protection
You hold a US stock portfolio and don’t want to sell, but fear a market decline. You can short US stock futures to hedge. When the market falls, the short position profits, offsetting losses in your stock holdings.

Short-term speculation
Bullish on tech stocks’ future rise? Buy Nasdaq 100 futures directly. When the index goes up, you profit. Compared to buying stocks outright, futures amplify returns through leverage.

Locking in entry price in advance
Lack sufficient cash now but expect a large inflow in 3 months. You can buy US stock futures now to “lock in” today’s price, then convert to actual stocks when cash arrives.

The four most active US stock futures products

The most active US stock futures in the US market are based on these four indices, each with “Mini” and “Micro” versions:

How to choose in practice?

• Smaller funds should choose Micro (smaller multiplier)
• Bullish on the overall market? Pick ES/MES
• Favor tech? Pick NQ/MNQ
• Nasdaq is more volatile and requires higher margin

The most concerned questions for beginners: Margin and leverage

Before trading US stock futures, you must deposit Initial Margin with your broker. This isn’t the purchase cost but a deposit to ensure you can cover potential losses.

For example, S&P 500 futures:

• Initial Margin: $12,320
• One ES contract nominal value: 4,000 points × $50 = $200,000
• Leverage: $200,000 ÷ $12,320 ≈ 16x

This means a 1% index move causes about a 16% change in your account. Sounds exciting? That’s why US stock futures are high risk.

If your account loses too much and falls below the maintenance margin, the broker will forcibly close your position. So it’s best to keep a buffer in your account and not fully leverage your margin.

Practical specifications of US stock futures trading

Trading hours (Eastern Time)

• Sunday 6:00 PM to Friday 5:00 PM
• Pause 1 hour from Monday to Thursday 5:00 PM to 6:00 PM
• Basically almost 24/5 trading, seamlessly connected with Asian markets

Contract expiration
Quarterly (the third Friday of March, June, September, December)

Settlement method
All US stock futures are cash-settled, no actual delivery of 500 stocks, only settled based on the final index settlement price.

Profit calculation
(Sell Price - Buy Price) × Multiplier = Profit/Loss

Example:

• Buy ES at 4000 points, sell at 4050 points
• Profit: 50 points × $50 = $2,500

What to do when a contract is about to expire? Roll-over

Don’t want to close the position before expiry? You need to do a roll-over: close the current contract and open the next quarter’s contract. Usually can be done with one order, with lower fees.

If you fail to roll over in time, the position will automatically settle at the settlement price, with realized profit or loss, without actual stock delivery.

Five major risks of trading US stock futures

Risk 1: Nominal value is often overlooked
Trading one ES contract controls about $200,000 worth of assets, not the $12,320 you deposited. Don’t be fooled by the margin number.

Risk 2: Leverage is a double-edged sword
16x leverage amplifies gains but also losses. A 1% adverse move can wipe out 1.6% of your account.

Risk 3: Unlimited risk in short positions
Shorting has theoretically unlimited losses. Strict stop-loss discipline is essential. Set your stop-loss before opening the position.

Risk 4: Volatility traps
Nasdaq is much more volatile than S&P 500, with higher margin requirements. Beginners should avoid blindly chasing high-volatility indices.

Risk 5: Cost of rolling over
Frequent roll-overs incur spreads and fees, eating into profits.

Alternatives to US stock futures: CFD(CFD)

If you find margin requirements too high, contracts too expensive, or rollover too troublesome, there’s an alternative: CFD(CFD).

Advantages of CFDs:

• Smaller contract sizes suitable for small investors
• Higher leverage (up to 1:400), lower margin requirements
• No expiry date, no rollover needed
• Some platforms offer weekend trading
• Some platforms have no commission

Disadvantages of CFDs:

• Not allowed in some countries/regions
• High leverage means high risk
• Contract specifications vary across platforms
• Overnight positions incur overnight fees
• OTC trading(OTC), liquidity less than exchange-traded products

Simple comparison:
Futures are more standardized and transparent, suitable for risk-tolerant investors; CFDs are more flexible and cheaper but require careful risk management.

Final advice

Trading US stock futures is not gambling but a tool that requires strict discipline and risk management:

1. Clarify your purpose — hedging, speculation, or locking in prices?
2. Choose the right product — ES/MES or Micro contracts based on your funds and risk appetite
3. Calculate leverage carefully — know how much you might lose if the market moves 1%
4. Always set a stop-loss — it’s a survival rule, not optional
5. Roll over periodically — don’t forget to roll over quarterly contracts if holding long-term

US stock futures do have higher thresholds than stocks, but as long as you understand leverage and risk, you can use them to amplify gains or hedge risks. The key is to prevent leverage from turning against you and destroying your account.