A financial instrument is the entity being bought and sold while trading.
Understanding which instruments are available (e.g., ES futures, NQ futures, crude oil) is crucial because different instruments have different volatility, margin requirements, and trading strategies. Choosing the right instrument impacts risk management and profitability.
A trader chooses to trade the E-mini S&P 500 (ES) because it has high liquidity and smaller tick increments, making it easier to scale in and out of positions compared to crude oil futures (CL), which are more volatile.
A firm that provides traders with capital to trade financial instruments, such as futures. Traders retain a percentage of the profits they generate, while the firm assumes the risk.
The specific account or evaluation package offered by the prop firm. Plans vary in account size, evaluation difficulty, profit targets, and rules.
A smaller-sized futures contract (e.g., 1/10th the size of a standard contract), which allows for more flexible risk management.
The standard-sized futures contract traded in the market.
A set milestone where a trader can increase their contract size or risk, typically based on achieving profits.