Futures Trading
Contracts, margin, liquidation and carrying costs — the mechanics of leveraged products, and why the failure mode here is different from spot.
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Leveraged products do not make a good process better. They make an existing process louder — including its flaws, and including the gap between the risk you intended and the risk you took.
This course is placed last on purpose. Work through risk management first.
What you will learn
- Explain what a futures contract is and how a perpetual differs from a dated one
- Describe initial margin, maintenance margin and how a liquidation is triggered
- Explain funding as a recurring cost and estimate its effect on a held position
- Recognise why leverage changes the sizing arithmetic rather than the sizing principle
Prerequisites
- Risk Management
- Trading Foundations
Course contents
Module 1 — The instrument
What the contract actually is.
What Futures Contracts Are
A futures contract is an agreement about a future price, standardised and cleared by a venue. Perpetuals remove the expiry date and replace it with a funding payment — a small change with large consequences.
8 min read
Module 2 — Leverage and cost
Margin, liquidation and the cost of holding.
Leverage, Margin and Liquidation
Leverage does not increase your edge. It compresses the distance between your entry and the point at which the venue closes your position for you — and that distance is the only one that matters when it runs out.
9 min read
Funding and Carrying Costs
A leveraged position is rented, not owned. Funding, roll costs and fees accrue whether or not you are right, and on longer holds they can quietly exceed everything else you are paying.
8 min read