How to Trade Futures and Read Order Flow

How to trade futures is a question about leverage first and markets second. A futures contract lets a small deposit control a large position, so a move that would be minor in a stock account can be decisive in a futures account. This course teaches the mechanics carefully, so that leverage is something you choose rather than something that happens to you.

How do futures work?

A future is an exchange-traded agreement to buy or sell a set amount of something at a later date. Profits and losses are settled every day through the clearing house, and you post margin as a deposit against losses. The course covers the contract specifications that turn price moves into money, contract by contract.

Why do futures traders roll their positions?

Because each contract expires. A trader who wants to keep a position closes the expiring month and opens the next one, and the price difference between the two months is part of the cost or gain of holding. The course shows how to roll by hand and how to read the roll on a continuous chart.

What is order flow in trading?

Order flow trading looks past the price chart to the orders that make it. A price chart shows where trades happened; the order book and the tape show who was waiting, who was in a hurry and where size changed hands. It is the closest a manual trader comes to the view of a market maker, and also one of the easiest views to misread.

The stream of orders arriving at the market: resting limit orders in the book and aggressive orders that cross the spread and trade. Order flow traders read the balance between the two to judge which side is in control near a level. The course teaches each source of order flow information by replaying recorded sessions.

Who is this course for?

Traders moving from stocks to futures, and prop traders whose firm trades futures. No programming is needed.

What you will be able to do

• Read a futures contract specification and calculate the money value of any price move.
• Explain initial and maintenance margin, and size positions by risk rather than by margin.
• Roll a position between expiries and explain the cost or gain of the roll.
• Plan and record futures trades in index, rates, energy and currency contracts.
• Read the limit order book and time and sales, and describe what large, hidden and spoofed orders look like.

Syllabus, module by module

1. What a future is

   Exchange, clearing house, contract size and the daily settlement of profit and loss.

2. Ticks and money

   Tick size, tick value and the money value of a move, for standard and micro contracts.

3. Margin and leverage

   Initial and maintenance margin, margin calls and why margin is not a measure of risk.

4. The order book

   Bids, offers, queues and depth, and how the book changes as orders arrive and cancel.

What every course contains

Every paid course comes with the first seven and the certificate, whichever level it sits at. The proctored exam and the credential come when the course is taken as part of a Certificate, Diploma or Fellowship. Everything is self-paced: the material is yours to study in any order, at any hour, for the whole of the license.

1. Workbooks. Written to train the thinking patterns and the important concepts of the course, with worked problems and the reasoning behind each answer, so that you learn to think the way the subject is thought.
2. Audio edition. Focused, well-presented recordings with explainers and examples of the material, made to be interesting, relevant and entertaining, so that the general subject can be learned away from the desk.
3. Notes. Pre-produced notes with every fact the course relies on, written out in full, so that nothing has to be transcribed from the films or the audio.
4. Cheat sheet. One sheet with every important learning concept of the course on it, to keep beside you during the work and to revise from before the exam.
5. Named sources. Every fact in the notes names its source, the paper, the book or the dataset, for anyone who wants to dig in further.
6. Explainer films. Focused films, in the style of the sample films on the catalog page, that walk through the most difficult concepts of the course with visual explanations of a high standard.
7. Transcript. A full transcript of every film and every audio recording, searchable and quotable.
8. Proctored exam. Taken as part of a Certificate, Diploma or Fellowship, the course ends in a proctored multiple-choice questionnaire, with a pass mark of 60% and three retakes included. A course taken on its own is assessed by its coursework and has no exam.
9. Verifiable certificate. A certificate of completion that a third party can verify: an employer sends the code on it to the credentials office and receives written confirmation of the course, the date and the result.
10. Credential of the program. The Certificate, Diploma or Fellowship of the program, track or path the course belongs to, awarded when every course in it is passed. Which one depends on the program you choose.

How the certificate is earned

Weekly contract exercises and two graded problem sets: a specification workbook for six contracts, and a twelve-week simulated futures record with a review. On a pass you receive the Course certificate in How to Trade Futures and Read Order Flow, issued by the Institute with a verification code. A course taken as part of a Certificate, Diploma or Fellowship ends in a proctored online exam with a pass mark of 60%. The fee includes three retakes; each attempt after that carries a reduced proctored exam fee. A course taken on its own is assessed by its coursework and has no exam. Read how certification works.

Before you start

This course assumes the material of the courses below, or the same knowledge gained elsewhere.

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