What You Need to Know About the Series 3 Exam


The National Futures Association (NFA) is the self-regulatory organization for the U.S. derivatives industry. The NFA works hand in hand with the Commodity Futures Trading Commission (CFTC) in the U.S. to regulate and control activities on the futures markets. Anyone who wishes to conduct business with the public on U.S. futures exchanges or in the retail foreign exchange markets must register with the NFA.

Individuals registering with the NFA must pass certain proficiency requirements. One of these requirements is to pass the National Commodities Futures Examination, or the Series 3 exam. The NFA administers this exam. The exam is a two-part test consisting generally of 125 multiple choice and true/false questions that tests general knowledge and proficiency in the world of futures trading in the United States. Candidates have two and one half hours to answer of all of the questions. There are two parts to the exam and the passing grade on each part is 70 percent.

The first part of the exam is broken into the following sections:

1. Futures trading theory and basic functions terminology

Questions are about knowledge of general theory, the futures contract, the structure of futures markets, hedging theory, speculative theory and general futures and options terminology.

2. Futures margins, option premiums, price limits, futures settlements, delivery and exercise and assignment

Questions deal with knowledge of margin requirements, option premiums, price limits, offsetting contracts, settlements and delivery as well as options exercise, assignment and settlement.

3. Types of orders, customer accounts and price analysis

Candidates must demonstrate proficiency in terms of all types of orders to buy and sell futures and options as well as technical price analysis, fundamental price analysis and interest rate price analysis.

4. Basic hedging and basic calculations

These questions focus on short and long hedging, the concept of basis and must show they understand the computation of basic hedging calculations.

5. Spreading

Candidates must answer questions dealing with general spread trading as well as common types of spreads in the futures markets.

6. Speculating in futures

This section focuses on awareness and knowledge about profit and loss calculations for speculative trades (including spreads) and applications for trading.

7. Option hedging, speculating and spreading

Option theory, hedge and speculative strategies, including calculations involving options and option spreads are the focus of this section.

Part one of the Series 3 Exam tests whether candidates have the basic knowledge and skills to trade in futures markets and to assist their customers who invest, trade and speculate in these markets.

Part two of the exam tests candidates on their knowledge and proficiency in the area of regulations and rules of the futures markets. This section includes questions on:

  • General regulatory issues
  • Future Commission Merchant (FCM) and Introducing Broker (IB) regulations
  • Commodity Pool Operators (CPO) and Commodity Trading Advisor (CTA) regulations
  • Arbitration procedures
  • NFA disciplinary procedures
  • CFTC Commodity Exchange Act Enforcement

Over recent years, there has been an increase in the regulatory oversight of futures markets because of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. However, with the new Trump Administration, the regulatory environment is likely to change in the months and years ahead. 

The exam requires a significant amount of preparation, particularly for those who do not have a great deal of experience in the world of futures markets. The NFA offers candidates a study guide. There are also a number of private companies that offer a study course and in some cases classroom instruction for those preparing for the exam. Remember to always use the most recent study guides as the regulatory environment tends to change over time. An old study guide could contain questions and answers that are no longer applicable.


Once a candidate passes the Series 3 Exam, there is a requirement for continuing education by the NFA. Specifically, the NFA requires completion of an ethics seminar and other professional educational requirements such as courses on money-laundering, fraud, and other timely topics. As the rules and regulations that govern futures exchanges are always changing, passing the Series 3 Exam is the first step when entering the exciting world of the futures business.