A future is a derivative with an obligation to buy or sell an underlying at an agreed price on a fixed expiry (maturity).
In plain terms — You commit to exchange something in the future at a price fixed today. In practice many traders close before expiry without ever taking delivery of the wheat or oil.
| Element | Meaning |
|---|---|
| Underlying | Index, commodity, currency, stock… |
| Margin | Collateral deposit — leverage effect |
| Tick | Minimum price increment |
| Roll | Moving position to the next contract |
| Front month | Nearest expiry, usually most liquid |
Why traders use futures
- Controlled leverage via margin
- Symmetric short vs long (long-and-short)
- Index and commodity exposure without buying every spot-market name
- Often high liquidity on major contracts (ES, CL, etc.)
Extra risks vs spot: margin calls, overnight gaps, roll cost.
Futures in charting
The future chart can diverge slightly from cash (basis). Technical and systematic analysis apply to the contract you trade — usually front month or a continuous adjusted series.