Futures Trading Terminology

A pre-set order that closes your position at a specific price to limit losses. Every trade should have one before you enter.

A target price where you exit the trade to lock in gains. Can be a fixed level or scaled out in portions.

The ratio between what you risk (SL distance) and what you stand to gain (TP distance). A 1:3 RR means you risk $1 to make $3.

Price levels where buying (support) or selling (resistance) pressure has historically caused price to bounce or stall.

How easily you can buy or sell without moving the price. High liquidity means tight spreads and fast fills. Clusters of stop losses also represent liquidity that larger players target.

The four data points that make up every candlestick. Open is where the candle started, high/low are the extremes, close is where it ended.

Moving your stop loss to your entry price so the trade is risk-free. Common after price moves in your favor.

Your net result on a trade or trading session. Can be measured in dollars, ticks, or points.

The highest price from yesterday's session. A key reference level that often acts as support or resistance.

The lowest price from yesterday's session. Same idea as PDH but on the downside.

Where the market closed yesterday. Useful for gauging whether today's session is trading above or below yesterday's settlement.

The highest price during the overnight (globex) session before the regular trading hours open. Often tested early in the day.

The lowest price during the overnight session. Along with ONH, these define the overnight range that regular session traders watch.

The price range established in the first 15-30 minutes of the regular session. Breakouts above or below the OR often set the tone for the day.

The highest and lowest prices reached so far in the current session.

The highest or lowest price a contract or index has ever traded at.

The price level where the most volume traded during a session or range. It acts like a magnet. Price tends to get pulled back toward the POC.

The price range where approximately 70% of trading volume occurred. Represents where the market found "fair value."

The upper boundary of the value area. Price trading above VAH suggests buyers are willing to pay a premium over fair value.

The lower boundary of the value area. Price trading below VAL means sellers are pushing below fair value.

A high on the TPO/market profile that looks flat or "unfinished" rather than tapered. Signals that the market didn't complete its auction and may return to that area.

Same concept as a poor high but at the bottom of the profile. A flat low suggests unfinished business on the downside.

A letter or block on a market profile chart representing a 30-minute period. TPO charts show you how long price spent at each level, not just how much volume traded there.

The range established during the first hour of regular trading (first two 30-minute TPO periods). Sets the framework for the day's auction.

A POC from a previous session that hasn't been revisited yet. These levels tend to act as magnets for future price action.

The average price weighted by volume throughout the day. Institutional traders use VWAP as a benchmark. Price above VWAP is generally bullish, below is bearish.

The difference between aggressive buying volume and aggressive selling volume. Positive delta means more buyers hitting the ask. Negative delta means more sellers hitting the bid.

When buying or selling volume at a price level is significantly lopsided (often 3:1 or higher). Shows where one side is dominating aggressively. Stacked imbalances are especially powerful.

When aggressive orders hit the market but price doesn't move because passive orders on the other side are absorbing them. Often precedes a reversal. Full guide here.

When the aggressive side runs out of steam after pushing price. Volume dries up and the move stalls. Often follows absorption at a key level.

A chart type that shows the exact buying and selling volume at every price level within each candle. Gives you much more detail than a standard candlestick. Also called PNF or volume imprint.

Shows resting limit orders at each price level above and below the current price. Tells you where passive buyers and sellers are waiting.

The bid is the highest price buyers are willing to pay. The ask (offer) is the lowest price sellers will accept. The difference between them is the spread.

A large order that's hidden from the DOM. Only a small portion shows at a time, and it refills as it gets hit. Used by institutions to avoid showing their full size.

The most traded futures contract in the world. Tracks the S&P 500 index. 1 point = $50 per contract.

Futures contract tracking the Nasdaq 100 (tech-heavy). 1 point = $20 per contract. More volatile than ES.

Futures contract tracking the Dow Jones Industrial Average. 1 point = $5 per contract.

Futures contract tracking the Russell 2000 small-cap index. 1 point = $50 per contract. Known for being choppy.

1/10th the size of the E-mini versions. Perfect for newer traders learning to trade with real money and smaller risk.

The total number of open futures contracts that haven't been settled. Rising OI with rising price confirms a strong trend. Falling OI suggests the move may be losing conviction.

Tracks how much volatility the market expects. When VIX is high, people are scared and price swings get wild. When it's low, everyone's relaxed. Useful for knowing what kind of day you're walking into.

RTH is the main session (9:30 AM - 4:00 PM ET for index futures). ETH includes the overnight/globex session outside of RTH.

The smallest price movement a contract can make. On ES, one tick = 0.25 points ($12.50). On NQ, one tick = 0.25 points ($5.00).

Futures contracts expire quarterly. Rollover is when traders move from the expiring contract to the next one. Happens on specific dates (usually the Thursday before expiration week).

When price pushes through a level just far enough to trigger stop losses, then reverses. Larger players use this to fill their orders at better prices using the liquidity from triggered stops.

A breakout is when price pushes above resistance with momentum. A breakdown is the same move to the downside through support.

When price breaks a level but can't hold and reverses back. Traps breakout traders and often leads to a strong move in the opposite direction.

Trading the idea that price tends to return to an average (like VWAP or POC) after moving too far from it. The opposite of trend-following.

Adding to a position in portions (scaling in) or taking partial profits at different levels (scaling out) instead of entering or exiting all at once.

When the market opens at a different price than where it closed. A gap up opens higher, gap down opens lower. Gap fills (price returning to the close) are common.

The money required in your account to hold a futures position. Day trading margin is lower than overnight margin. Your broker sets the requirements.

The decline from your account's peak to its lowest point during a losing streak. Managing drawdown is one of the most important parts of trading.

How many contracts you trade. Should be based on your account size, risk tolerance, and the distance to your stop loss. Never risk more than you can handle losing.

A pre-defined dollar amount you're willing to lose in a single day before you stop trading. One of the most important rules a trader can set. More on risk management.