What is a Futures contract?
A futures contract is an agreement by two parties for the delivery of an underlying commodity, index or currency at some future date for a pre-agreed arranged price. Futures are derivative products that can speculate on forex, commodities (ex Gold, Oil, Pork) or indices unlike equity (which has a limited number of shares), an unlimited amount of futures contracts can be created. Simplified Futures Contract: When you buy 1 futures contract on the Emini Sp for example at 2100. And sell it at 2105 you just made 5 points. Now if you were only trading 1 contract that would be worth $250 ($50 per point, per contract * 5 points). Now if you were to trade 5 contracts and make 5 points that would be $1250. ($250 for 5 points * 5 contracts = $1250)