Best Futures Contracts to Trade in a Prop Shop Traders Evaluation

Trading futures contracts can be a highly profitable endeavor, especially when done within the framework of a professional proprietary trading firm. Prop shops offer traders capital, resources, and structured evaluation programs designed to develop and identify the most skilled participants. For traders aiming to ace their evaluation and secure funding, choosing the right futures contracts to trade is crucial. This article explores the best futures contracts suited for prop shop traders, focusing on liquidity, volatility, and risk management considerations to help traders maximize their chances of success.

Understanding the Importance of Contract Selection in Prop Shops

Proprietary trading firms typically require traders to complete evaluation phases where performance metrics such as profit targets, drawdowns, and consistency determine advancement. Selecting the optimal futures contracts can make these challenges more manageable by providing better trading conditions and opportunities. High liquidity and volatility provide ample price movement for scalping or swing trading, while manageable tick values help control risk. Furthermore, trading familiar contracts allows traders to build confidence and execute strategies with precision.

Many aspiring prop shop traders enroll in evaluations through programs such as Prop Shop Traders to access funded accounts. Knowing which futures contracts align with their trading styles can be the difference between passing the evaluation or falling short.

Popular Futures Contracts for Prop Shop Evaluations

Not all futures contracts are created equal when trading with prop firm evaluations in mind. The following contracts are widely favored due to their blend of liquidity, volatility, and tradeability, making them excellent choices during prop shop evaluations.

E-mini S&P 500 (ES)

The E-mini S&P 500 futures contract is one of the most popular and widely traded contracts globally, especially among prop shop traders. It offers exceptional liquidity, tight bid-ask spreads, and continuous market hours, making it highly accessible. The ES contract tracks the S&P 500 stock index, providing exposure to a broad market and ample volatility for intraday trading strategies.

For evaluation traders at Prop Shop Traders, the ES contract is often the default choice because it allows precise risk management with its tick size of 0.25 index points worth $12.50 per tick. This fine granularity enables scalping and high-frequency trading approaches, allowing traders to meet profit targets efficiently.

Micro E-mini S&P 500 (MES)

The Micro E-mini S&P 500 is essentially a smaller version of the ES contract and has gained tremendous popularity within prop trading for evaluation accounts requiring smaller contract sizes. The MES offers a quarter of the ES size, with each tick worth $1.25, making it ideal for traders with smaller account sizes or those refining their skillsets without risking large capital.

Using contracts like MES at Prop Shop Traders enables traders to manage position sizing more effectively during evaluation phases. The decreased financial commitment per contract helps maintain low drawdown levels, a vital consideration in passing funded evaluations.

Crude Oil Futures (CL)

Crude oil futures (CL) are among the most volatile contracts available, offering substantial profit opportunities for traders with a risk-tolerant approach. Oil futures tend to be highly liquid and attract global interest, with significant intraday price swings that can be capitalized on by experienced traders.

However, the CL contract requires disciplined risk management due to its higher tick value and volatility. Traders at prop firms like Prop Shop Traders who are confident in their ability to manage risk and execute precise entries may find CL to be a rewarding contract to trade during evaluation phases. This contract is better suited for those with a medium to high risk tolerance and proven strategy development.

Euro FX Futures (6E)

The Euro FX futures contract (6E) offers exposure to the euro-dollar exchange rate, ideal for traders interested in currency markets. This contract tends to have good liquidity and exhibits steady volatility, making it suitable for swing and range-bound trading strategies prevalent in prop trading evaluations.

For traders who prefer forex-style trading dynamics within a regulated futures market, the 6E contract is an excellent choice. At Prop Shop Traders, many traders leverage this contract to diversify their portfolios and adapt to market conditions beyond equities and commodities.

Gold Futures (GC)

Gold futures are another staple in many prop traders’ repertoires. Gold contracts provide a unique blend of moderate volatility and strong liquidity, especially during active market hours. Gold often acts as a hedge or safe-haven asset, and its price movements can be influenced by geopolitical events, inflation data, and economic releases.

Prop shop traders at Prop Shop Traders benefit from trading gold futures by applying technical and fundamental strategies to capitalize on range-bound or trending periods. The gold futures’ tick value also allows for precise trade sizing, aiding in strict risk management during the evaluation process.

Why Liquidity and Volatility Matter in Contract Selection

Choosing highly liquid futures contracts is paramount in prop trading evaluations. Liquidity ensures minimal slippage during order execution, which can be the difference between success and failure in fast-paced trading environments. The tighter the bid-ask spread, the lower the transaction costs, directly impacting profitability and the ability to consistently meet profit targets stipulated by prop firms like Prop Shop Traders.

Volatility is equally important as it indicates the availability of price movements for traders to capitalize on. Contracts with consistent and reliable volatility provide ample opportunities for intraday profits or swing trades. However, excessive volatility without corresponding liquidity can lead to unpredictable spreads and execution challenges, underscoring the importance of balanced contract selection.

How Prop Shop Trading Evaluations Impact Futures Contract Choice

Prop firm evaluations often come with strict rules regarding maximum drawdowns, target profits, and trading hours. Selecting futures contracts that align well with these criteria increases the likelihood of passing the evaluation phase. Contracts like ES and MES perfectly fit these requirements due to their size flexibility and balanced volatility.

Prop traders at Prop Shop Traders often tailor their trading strategies around these contracts, focusing on consistent profitability while managing risks in line with evaluation rules. Choosing contracts outside these norms can increase risk and reduce the chance of funding success.

Considerations for Time Zones and Trading Hours

Another critical factor is trading hours and how they fit a trader’s schedule. Some futures contracts offer near 24-hour trading sessions, while others have more limited active hours. Contracts like ES and Cl have extended trading hours that allow traders in different time zones or with unconventional schedules to participate effectively.

For those undergoing prop shop evaluations such as with Prop Shop Traders, this flexibility is invaluable. It allows accommodation of personal schedules and maximizes market access, which can be leveraged for consistent performance and meeting evaluation targets.

Position Sizing and Risk Management with Futures Contracts

Proper position sizing is a cornerstone of success in prop shop evaluations. Futures contracts differ in tick sizes and dollar value per tick, impacting the risk per trade. Contracts like MES provide smaller increments of risk, appealing to traders who want to control maximum drawdown tightly.

When trading larger contracts such as the E-mini S&P 500 or Crude Oil, traders must be acutely aware of the risk per contract and adjust their position sizes accordingly to stay within prop firm guidelines.

At Prop Shop Traders, the ability to accurately gauge risk and position size is an essential skill evaluated during the funding process. Selecting the right contracts supports this by offering manageable and predictable tick values.

Technology and Platform Selection

Beyond contract selection, choosing an advanced trading platform and technology equipped with features such as real-time data, advanced order types, and risk management tools enhances a trader’s ability to succeed. Many prop firms including Prop Shop Traders provide or recommend robust platforms suited for futures trading.

Platforms with direct market access and low latency order execution are particularly advantageous for high-frequency and scalping strategies popular with futures traders. Compatibility with the chosen contracts and access to detailed charts and analytics empower traders to optimize their evaluation performance.

Psychological and Strategic Alignment with Chosen Contracts

Selecting futures contracts that match a trader’s personality and strategic preferences is often overlooked but incredibly important. For example, traders who thrive on fast, high-intensity trading may favor contracts with tighter bid-ask spreads and frequent movement like the ES, whereas those who prefer longer-term swings might lean towards gold or currency futures.

Using the resources and training from Prop Shop Traders can help refine traders’ skills to identify which contracts best complement their approach, leading to better performance and a higher chance of passing evaluations.

Additional Futures Contracts Worth Considering

While the contracts discussed above are primary contenders, prop shop traders might also explore other futures such as Nasdaq 100 E-mini (NQ), Treasury Bond futures (ZN, ZB), and natural gas (NG). Each offers distinct advantages depending on market conditions and personal trading styles.

Nasdaq futures (NQ), for example, usually exhibit higher volatility than ES, making them attractive for aggressive traders. Treasury futures appeal to those focused more on interest rate movements and economic data impacts. Prop shop evaluations at Prop Shop Traders often encourage traders to specialize in the contracts they’re most comfortable with for optimal results.

Final Steps to Identify Your Best Futures Contract

To identify the best futures contracts to trade in a prop shop evaluation, consider the following steps: assess your trading style, test contracts during simulated trading, analyze liquidity and volatility profiles, and understand the tick value relative to your risk tolerance.

Programs like Prop Shop Traders provide invaluable educational resources and access to funded trading capital for aspiring futures traders, helping you test and refine contract selection strategies within a structured environment.