Recently, I've seen many friends interested in exploring US stock futures, but they don't know much about this area. So I’ve organized some of my understanding here, hoping to help everyone get started quickly.

To put it simply, futures are an agreement. You lock in the transaction of an asset at a certain price for a future date. The easiest example is, if you buy a crude oil futures contract now that settles in three months at $80, you’re committing to buy a certain amount of oil at $80 in three months. If the oil price rises to $90, your contract becomes more valuable.

The logic of US stock futures is similar, except the underlying is an index rather than a commodity. Since an index represents a basket of stocks, when you buy or sell US stock futures, you’re actually trading the entire stock portfolio behind that index. The calculation is simple: index points multiplied by a multiplier equals the notional value. For example, if you buy micro Nasdaq 100 futures (code MNQ) at 12,800 points, the actual notional value is 12,800 × $2 = $25,600.

The most active US stock futures on the market are mainly four types, ranked by trading volume: S&P 500, Nasdaq 100, Russell 2000, and Dow Jones Industrial Average futures. Each index has mini contracts (E-mini) and micro contracts (Micro E-mini). Micro contracts are one-tenth the size of mini contracts, suitable for retail investors with smaller capital.

Regarding settlement methods, US stock futures use cash settlement rather than physical delivery. Since you can’t actually deliver 500 stocks or 100 tech stocks, at expiration, you only need to calculate profit or loss based on price changes.

Before trading US stock futures, you need to deposit an initial margin, which is usually only a small part of the actual investment amount. For example, when the S&P 500 futures are at 4,000 points, the initial margin is about $12,320, which creates roughly 16 times leverage. Leverage is a double-edged sword; a 1% move in the index can magnify to a 16% profit or loss, so risk management is crucial.

My personal advice is, when choosing a US stock futures contract, first determine which market you are bullish on—whether the broad market, tech stocks, or small caps. Then select the appropriate contract size based on your capital. For example, if you have only $20,000, using Micro E-mini contracts (MES) is enough, because a standard ES contract’s notional value is too large. Also, consider volatility; Nasdaq 100 is more volatile than the S&P 500, so you might need more cautious position management.

US stock futures mainly serve three purposes. First is hedging—profiting from short positions to offset portfolio losses during market downturns. Second is speculation—betting directly on the index direction to profit from price differences. Third is locking in prices in advance—if you expect a large fund inflow in three months, you can buy futures now to lock in your entry point.

Calculating profit or loss is straightforward: price change multiplied by the multiplier. For example, if ES futures buy at 4,000 and sell at 4,050, you gain 50 points, and with $50 per point, that’s a $2,500 profit.

A few details to note: First, futures contracts have expiration dates (CME US stock futures expire on the third Friday of March, June, September, and December). If you want to maintain your position beyond expiration, you need to close the old contract and open a new one—this is called rollover. Second, US stock futures trading hours are very long, starting from 6 PM on Sunday, nearly around the clock, which is friendly to global investors. Third, strict stop-loss discipline is very important because leverage can amplify losses infinitely, so always set your stop-loss levels in advance.

If you think the margin requirements for US stock futures are too high, there’s also the option of Contracts for Difference (CFD). CFDs allow for smaller minimum investments and deposits, with leverage up to 1:400, and no expiration date—you can close positions at any time. But higher leverage means higher risk, so it’s a trade-off.

Overall, US stock futures are powerful tools, useful for both hedging and speculation. But because of their leveraged nature, risks are also amplified. Before trading, you must fully understand the core elements of index selection, position sizing, and risk management. Choosing the right product for yourself, combined with disciplined execution, will help you navigate the market more steadily.