Understanding futures contracts, how they move, and how we trade them.
This is like buying insurance against price increases. You lock in a price today to protect against it going up later. Booking your girls trip flights at $400 now — even though they might go up to $700 by summer — is hedging. You're protecting your budget.
This is when traders predict the future direction of prices and position themselves to profit. They don't actually want the flights — they want to profit from the price movement. If they think prices will rise, they buy the contract now and sell it later at a higher price.
This is the thing the futures contract is based on. It can be a physical commodity like oil, gold, wheat, or coffee — or a financial asset like a stock index or currency. When you trade NQ futures, the underlying asset is the Nasdaq 100 Index.
This defines how much of the underlying asset one contract represents. For example, one crude oil futures contract represents 1,000 barrels of oil. One NQ contract represents the index level × $20. The size determines how much money each price movement is worth to you.
This is the agreed-upon price at which the asset will be bought or sold when the contract expires. Both the buyer and seller lock into this price at the time the contract is created. It's the number you see on your chart.
Every futures contract has a set date when it expires. On this date, the contract must be fulfilled — either by delivering the asset or by closing the position. As speculators, we almost always close our positions well before expiration.
How the contract is fulfilled at expiration. Physical delivery means the actual asset changes hands — a farmer actually delivers wheat. Cash settlement means no physical delivery happens — the difference between the contract price and the market price is simply settled in cash. NQ and MNQ futures are cash-settled, which is why we never have to worry about 1,000 barrels of oil showing up at the front door.
For this first example, we'll act as if we are hedging...
The trip is set — Miami in 3 months. Flights are $400/ticket right now but you've been watching them creep up every week. You don't want to risk prices doubling on you, so you book all 6 tickets today. You just locked in your price with a futures contract.
Our tickets are locked in at $400. Everyone else scrambling to book is paying $700. We protected our budget and our girls are still going.
We're still paying $400/ticket even though prices dropped. That stings a little, but we got the peace of mind and the trip is booked. No stress.
What if we don't actually want the flights... now we're speculating.
Now imagine there's a marketplace where people trade flight contracts — not the actual seats, just contracts tied to flight prices. You've noticed that flights to Miami always spike in summer. You predict prices will rise, so you buy a contract at $400/ticket. You don't want to fly anywhere. You want the profit from the price movement.
Here's the key difference from hedging: as a speculator, you're not protecting a trip budget — you're trying to make money from the contract itself. You buy it at one price, and you sell it at another. If you predicted correctly, you profit. If you didn't, you take a loss. You never get on the plane.
Your contract lets you buy at $400 — but the market price is now $700. That contract is worth $300 more per ticket. You don't actually fly — you close your position and the $300/ticket difference is yours.
Your contract locks you in at $400 — but the market dropped to $250. Nobody wants to pay $400 for a $250 flight. Your contract lost value. You close and take the loss.
So who are you selling this contract to? You don't need to find a buyer yourself — your brokerage platform handles everything behind the scenes. When you want to exit, you click "close" or "flatten," and the brokerage instantly matches you with another trader on the other side. There are thousands of traders buying and selling at any given moment — this is called liquidity. NQ is one of the most liquid futures contracts in the world, which means you can get in and out almost instantly during market hours.
You can exit your trade at any time the market is open — to take profits, cut losses, or simply step away. You're never stuck. In, out, done.
What are we actually trading? Surely not flight futures...
The Nasdaq 100 is a stock index that tracks the 100 largest non-financial companies listed on the Nasdaq exchange. It's heavily weighted toward tech — think Apple, Microsoft, Amazon, Google, Meta, Tesla, Netflix, and NVIDIA. When these companies report earnings, release products, or get hit with news, the Nasdaq 100 moves. And when it moves, our contracts (NQ and MNQ) move with it.
You're not trading individual stocks. You're trading the movement of the entire index — all 100 companies wrapped into one number. That number is what you see on your chart.
The full-sized contract. Each point = $20. Requires more margin, bigger P&L swings. For experienced traders.
The micro version. Each point = $2. Same exact price movement, 1/10th the dollar impact. This is where we start.
MNQ is 1/10th the size of NQ — same exact price movement, just smaller dollar amounts. A 10-point move in NQ = $200 gain or loss. That same 10-point move in MNQ? Just $20. It lets you learn with real money while keeping your risk small. This is how we start.
But wait... do I have to pay the full contract cost upfront?
This is what NinjaTrader requires to hold a position during the trading session. As day traders, this is the number that matters to us. It's low because you're expected to close your trade before the session ends. On NinjaTrader: $1,000 for NQ and $100 for MNQ.
This is the much higher amount required by the CME exchange if you want to hold a position past the session close (3:45 PM CT). Since we're day traders, we rarely need this — but if you're still in a position 15 minutes before close and don't meet initial margin, NinjaTrader will liquidate your position.
| NQ (E-mini) | MNQ (Micro) | |
|---|---|---|
| Day Margin What you need to day trade |
$1,000 | $100 |
| Initial Margin Required to hold overnight |
$40,542 | $4,054 |
Heads up: NinjaTrader raises day margins to 4× the standard rate 15 minutes before major economic news announcements (like CPI, FOMC, NFP). So that $100 MNQ margin temporarily becomes $400, and the $1,000 NQ margin becomes $4,000. The elevated margins stay in place for about 5 minutes after the announcement.
You can always check the latest margin requirements at ninjatrader.com/pricing/margins
Every trade has a small commission. On NinjaTrader, expect roughly ~$1.40 per side for NQ and ~$0.37 per side for MNQ. "Per side" means you pay once to enter and once to exit. So a round-trip MNQ trade costs about $0.74 total. It's small per trade, but as a scalper taking multiple trades per day, it adds up. Factor it into your math.
Less available + more demand = price goes up. Think peak travel season — fewer seats, more people wanting them, prices skyrocket.
Job reports, inflation, interest rate decisions — all of these move financial futures. Major data drops = major moves.
Wars, trade disputes, sanctions — sudden global events create sharp, fast price movements. Volatility = opportunity.
We trade the Nasdaq 100 (NQ) — a stock index. It moves based on how the top 100 tech-heavy companies are performing. When Apple drops earnings, when the Fed raises rates, when inflation data surprises — that's when NQ moves. And that's when we make money.
Numbers on a screen don't tell you much. But when you plot those numbers visually — price on one axis, time on the other — patterns emerge. You can see momentum, reversals, areas where buyers and sellers fought over price, and where the market is likely to move next. Charts turn raw data into a story you can read.
TradingView is the charting platform we use to analyze price action. It's free, runs in your browser, and gives you access to real-time NQ data. You'll use it to study the market, mark key levels, and plan your trades. Your broker (NinjaTrader) is where you actually execute trades — TradingView is where you read the market.
The bar at the very top of TradingView. You'll see options like 15s, 1m, 5m, 15m, 30m, 1h, 4h, D, W. Each one changes how much time a single candle represents. We primarily use the 15-second (15s) timeframe for our scalping strategies. The active timeframe is highlighted in blue.
Right below the timeframe bar, you'll see the symbol name (NASDAQ 100 E-mini Futures · 15s · CME) followed by four numbers: O (Open), H (High), L (Low), C (Close). These update for whichever candle your cursor is hovering over. The green or red number at the end shows the change for the session. This tells you exactly what happened during that candle.
The red SELL and blue BUY buttons show the current bid and ask prices. The small number between them (0.50) is the spread — the difference between what buyers are offering and what sellers are asking. When you're ready to enter a trade, these are the prices you'll get. You won't use these buttons directly in TradingView — you'll place orders through your broker (NinjaTrader).
The bars on the chart — each one represents price movement over your chosen timeframe (15 seconds for us). Hollow/outlined candles mean price closed higher than it opened (bullish). Filled candles mean price closed lower (bearish). The thin lines (wicks) above and below show the highest and lowest prices reached. We'll go deep into reading candles in our candlestick class.
The vertical scale on the right side. It shows the price level in USD. On NQ right now, you'll see numbers in the 25,000+ range. As candles move up on the chart, price is increasing. As they move down, price is decreasing. You can click and drag this scale to zoom in or out on the price axis.
The dashed horizontal line with a blue price tag on the right. This shows where price is right now — it updates in real time, tick by tick. When you enter a trade, you're entering at or near this price. This is the heartbeat of the chart.
The horizontal scale at the bottom. It shows you when each candle formed — with timestamps like 9:40 AM, 10:00 AM, 10:15 AM. Our trading session runs Mon-Thu, 9:00-10:30 AM EST. You can click and drag this scale to scroll back through earlier price action.
The toolbar on the left side of TradingView. This is where you'll find tools for drawing trend lines, horizontal lines, rectangles, and text labels on your chart. We use these to mark supply and demand zones, draw key price levels, and plan our trades visually. You'll get very familiar with these as we progress through the cohort.
A tick is the smallest possible price movement in a futures contract. For NQ and MNQ, one tick = 0.25 points. Price can never move by 0.10 or 0.13 — it jumps in exact 0.25 increments. Think of it like a ruler where the smallest line is a quarter-inch. Price can only land on those lines.
A point is simply 4 ticks grouped together. One point = a $1.00 move in the index price. So going from 19,500 to 19,501 is 1 point (4 ticks). Points are the bigger unit — ticks are the smaller one. You'll hear both used constantly.
Because ticks and points are how you calculate how much money you made or lost. Every tick has a dollar value. In NQ, each tick = $5. In MNQ, each tick = $0.50. So if price moves 10 ticks in your favor on NQ, you just made $50. If it moves 10 ticks against you on MNQ, you lost $5. The math is always: number of ticks × tick value = your P&L.
| Tick (0.25 pts) | Point (4 ticks) | 10 Points | 50 Points | |
|---|---|---|---|---|
| NQ | $5 | $20 | $200 | $1,000 |
| MNQ | $0.50 | $2 | $20 | $100 |
| Spec | Details |
|---|---|
| Description | Tracks the Nasdaq 100 Index (top 100 tech-heavy stocks) |
| Contract Size | Index level × $20 per point |
| Example Value | NQ at 19,500 → contract = $390,000 |
| Dollar Per Point | $20 per 1-point move |
| Tick Size | 0.25 points = $5 per tick |
| Day Margin | $1,000 on NinjaTrader |
| Initial Margin (Overnight) | $40,542 (set by CME, subject to change) |
| Trading Hours | Sun 6PM – Fri 5PM ET (nearly 24 hours, 5 days) |
| Commission | ~$1.40 per side on NinjaTrader |
| Spec | Details |
|---|---|
| Description | Micro version of NQ — same Nasdaq 100 Index, 1/10th the size |
| Contract Size | Index level × $2 per point |
| Example Value | MNQ at 19,500 → contract = $39,000 |
| Dollar Per Point | $2 per 1-point move |
| Tick Size | 0.25 points = $0.50 per tick |
| Day Margin | $100 on NinjaTrader |
| Initial Margin (Overnight) | $4,054 (set by CME, subject to change) |
| Trading Hours | Sun 6PM – Fri 5PM ET (same as NQ) |
| Commission | ~$0.37 per side on NinjaTrader |
With MNQ at roughly 19,500 and a day margin of $100, the contract is worth about $39,000. That means NinjaTrader is giving you approximately 400:1 leverage. You're controlling $39,000 of exposure with just $100 in margin. For NQ at the same price level with $1,000 day margin, that's also roughly 400:1 leverage on a $390,000 contract.
This is why risk management is everything. With 400:1 leverage, a small move in the wrong direction can wipe out your margin instantly. Never trade at full leverage. Always have excess margin in your account, and always use a stop loss.
You can always check the latest margin requirements at ninjatrader.com/pricing/margins
A price level where your broker automatically closes your position to limit losses. You decide before you enter how much you're willing to lose — and the platform enforces it.
A price level where your broker automatically closes your position to lock in gains. No second-guessing, no watching it reverse. Set it, and let it work.
"I'll just watch it." No. The market moves faster than your fingers. Always set a stop loss before you enter. Every. Single. Time.
If one bad trade can blow your account, your position is too big. Never risk more than 1-2% of your account on a single trade. Live to trade another day.
NQ is 10× the value of MNQ. A 10-point loss on NQ = $200. On MNQ = $20. Know which one you're trading and size accordingly.
You set it for a reason. Moving it further away because you "hope" the trade comes back is how small losses become big ones. Respect your plan.
FOMC, CPI, NFP — these events cause massive, unpredictable moves. As a beginner, sit out the first 15-30 minutes after major news drops. Watch, learn, then trade.
You took a loss and now you want it back. So you take another trade immediately, emotionally. This is how one bad trade becomes three. Walk away. Come back tomorrow.
Open a brokerage account with NinjaTrader (or another futures broker), deposit your own money, and trade with it. You keep 100% of your profits, but you also bear 100% of the risk. This is the most straightforward path — your money, your rules, your risk.
A prop firm (proprietary trading firm) gives you access to their capital to trade with. You pay a small evaluation fee, prove you can trade by hitting a profit target without breaking the rules, and then you get a funded account. You keep 80-90% of the profits you make.
| Term | Definition |
|---|---|
| Futures Contract | An agreement to buy/sell an asset at a specific price on a future date |
| Underlying Asset | The thing the contract is based on (oil, gold, stock index, etc.) |
| Tick | The smallest price increment. NQ tick = 0.25 points = $5. MNQ tick = 0.25 points = $0.50 |
| Point | = 4 ticks. NQ point = $20. MNQ point = $2 |
| Margin | The deposit required to open a futures position (not the full contract value) |
| Day Margin | The margin required to hold a position during the trading session (intraday) |
| Initial Margin | The higher margin required to hold a position overnight, set by the CME exchange |
| Leverage | Using margin to control a position larger than your deposit |
| Stop Loss | An automatic exit order that limits your loss to a predetermined amount |
| Take Profit | An automatic exit order that locks in gains at a predetermined price |
| Long | Buying a contract because you think price will go up |
| Short | Selling a contract because you think price will go down |
| NQ | E-mini Nasdaq 100 Futures — $20/point, $5/tick |
| MNQ | Micro E-mini Nasdaq 100 Futures — $2/point, $0.50/tick (1/10th of NQ) |
| Nasdaq 100 | A stock index tracking the 100 largest non-financial companies on the Nasdaq (Apple, Microsoft, Google, etc.) |
| Hedging | Using futures to protect against unfavorable price movements |
| Speculation | Using futures to profit from predicted price movements |
| Brokerage | The platform that matches buyers and sellers — handles execution for you |
| Liquidity | How easily you can enter and exit trades — NQ is one of the most liquid futures contracts in the world |
| Cash Settlement | The contract settles in cash (the price difference) — no physical delivery |
| OHLC | Open, High, Low, Close — the four price points that define every candlestick |
| Spread | The difference between the bid (sell) price and ask (buy) price |
| Commission | The fee your broker charges per trade — roughly $0.37/side for MNQ, $1.40/side for NQ on NinjaTrader |
| Prop Firm | A company that gives you access to their capital to trade with — you pass an evaluation, get funded, and keep 80-90% of profits |