Best Futures Contracts for Day Trading

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Futures are an attractive market for day traders. You don't need much capital to get started, and you can earn big returns if you're smart with it.

While you'll need at least $25,000 to day trade stocks, you can start day trading futures with as little as $750—although starting with more is recommended, depending on your risk level. Big returns (and losses) are possible since you only need a small amount of capital to control positions that can produce big profits and losses in seconds. 

The amount of capital you require to day trade will depend on the futures contract you trade. Futures contracts have different "day trading margin" requirements, meaning you need to have varying amounts of money in your account to trade various contracts. If you have a small account, you're limited to futures contracts that have low day trading margins. A large account gives you more flexibility in what to day trade, and the guide below will help you decide.

How to Pick a Futures Contract to Day Trade

To find the right day trading futures contract for you, you should consider three main factors: volume, margins, and movement. 

Volume

In terms of volume, day trade contracts that typically trade more than 300,000 contracts in a day. It assures you can buy and sell at the levels you want and that there will be another trader there to trade with you.

As of April 2020, the Chicago Mercantile Exhange Group reports the following are the most heavily traded futures contracts:

  • E-Mini S&P 500 (ES): 2,045,343 average daily volume
  • Eurodollar (GE): 1,911,417 average daily volume
  • Crude Oil WTI (CL): 1,435,401 average daily volume
  • 10-Year Treasury Note (ZN): 950,213 average daily volume

Based on volume, these are consistently some of the top picks. Traders then need to look at margins and movement to determine which suits their finances and trading style. 

Margins

Day trading margins vary by broker. To provide an idea though, NinjaTrader brokerage offers the following day trading margins on these contracts. 

  • E-Mini S&P 500 (ES): $500 day-trading margin per contract
  • Eurodollar (GE): $500 day-trading margin per contract
  • 10-Year Treasury Note (ZN): $500 day-trading margin per contract
  • Crude Oil WTI (CL): $1,000 day-trading margin per contract

As you can see, crude oil has higher margins than the other contracts. Therefore, it follows you need a larger account to trade it. Oil is also quite volatile. Therefore, price movement must also be considered.

Movement

To establish movement, two things must be considered: point value and how many points the futures contract typically moves in a day. The following list provides the contract, the point value and daily average movement in points. 

  • E-Mini S&P 500 (ES) - 1 Point = $50 150.63 point average daily range
  • Eurodollar (GE) - 1 Point = $2,500 0.10 point average daily range
  • 10-Year Treasury Note (ZN) - 1 Point = $1,000 0.70 point average daily range
  • Crude Oil WTI (CL) - 1 Point = $1,000 3.2 point average daily range

The above volatility is based on the average 14-day true range as of April 8, 2020. The daily range will fluctuate, with some days and weeks seeing higher volatility, and other days and weeks seeing lower volatility. But this provides a good estimate for comparison of volatility between futures contracts. 

Choosing the Right Futures for You

E-Mini S&P 500 futures (ES) are an excellent middle ground and a good place for day traders to start. Margins are low at $500, and volume is also slightly higher than crude oil. Holding a single contract through a typical trading day could see your profit/loss take a $7,518 swing (150.63 points x $50/point). Not that you should buy and hold a contract all day; this is just an example to highlight volatility.

New traders will typically find the E-Mini S&P 500 futures produce enough action to create consistent income, and they can start trading these contracts with $3,500 or more in their trading account. Viewing a one-minute chart will show there are lots of opportunities to get into and out of trades as the price fluctuates throughout the day.

Crude oil (CL) provides decent volume, but it also requires the most margin and is the most volatile. If you held one contract during an average day, your profit/loss could swing $3,200 (3.2 points x $1000/point). It makes it an exciting market choice but isn't recommended for new traders or traders with small accounts (under $5,000). Viewing a one-minute chart will show there are lots of opportunities to get into and out of trades as the price fluctuates throughout the day.

10-Year Treasury Note futures (ZN) are another option for day traders. Volume is decent but not as high as the S&P 500 futures. The 10-year is also less volatile in terms of dollars at risk per contract. For example, if you held a 10-year contract through a typical trading session, you could see your profit/loss fluctuate up to $700 (0.70 points x $1000/point). Viewing a one-minute chart will show there are lots of opportunities to get into and out of trades as the price fluctuates throughout the day.

Eurodollar futures (GE) can be ruled out as a day trading choice unless you like very slow movement. During a typical trading session, the price may only move once or twice, resulting in few opportunities for profit. It is a popular market for long-term traders and institutions, not day traders. View a one-minute chart of this futures contract, and you will see that it doesn't move much, thus not favoring day trades.

Final Word on Best Futures Contract for Day Trading

Based on volume, margins, and movement you now have a few choices to consider. If you are starting out, trade the E-Mini S&P 500, or the 10-Year Treasury note. Both produce lots of movement and volume each day, as well as low day trading margins. As you progress, you may also consider crude oil futures. It has slightly lower volume than the prior two, is more volatile and has higher day trading margins. That means you should have a larger account to trade it. Eurodollar futures have high volume but are not a day trading market. 

Now that you know where to look, pull up an intraday chart of each, and see which aligns with your day-trading strategies the best.

Article Sources

  1. Optimus Futures. "Futures Trading Margin Requirements." Accessed April 7, 2020.

  2. Chicago Mercantile Exchange. "CME Group All Products—Codes and Slate." Accessed April 7, 2020.

  3. Ninjatrader. "Futures Contract Details." Accessed April 7, 2020.

  4. Barchart. "S&P 500 E-Mini Jun '20 (ESM20)." Accessed April 8, 2020.

  5. Barchart. "Eurodollar Jun '20 (GEM20)." Accessed April 8, 2020.

  6. Barchart. "10-Year T-Note Jun '20 (ZNM20)." Accessed April 8, 2020.

  7. Barchart. "Crude Oil WTI Jun '20 (CLM20)." Accessed April 8, 2020.