Futures Risk Management

Futures combine high leverage with near 24-hour trading, which can lead to fast, large losses. Here are the key risks, how a real 2025 swing would have hit a leveraged trader and rules for staying in the game.

The biggest risks

• Leverage: a small index move can wipe out the margin in an account.
• Overnight and weekend gaps: news can move prices before you can react.
• Limit and halt rules: in extreme moves, trading can pause, trapping positions.
• Tax rules differ: many U.S. futures are taxed 60% long-term and 40% short-term, regardless of holding period.

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