Futures term structure compares prices across different contract expiration dates. Its shape reflects factors such as financing, storage, availability, and expectations, offering information beyond the movement of a single contract.
The futures term structure shows how contract prices vary across different expiration months, reflecting carrying costs, supply expectations, and market sentiment. In futures trading, understanding whether a market is in contango or backwardation helps you gauge underlying supply and demand dynamics beyond immediate price action.
When trading with a futures prop firm like My Funded Futures or Tradeify, keeping an eye on term structure can help you avoid unexpected volatility around contract rollover dates. Rollover periods often trigger sudden liquidity shifts and margin adjustments that can impact your daily loss limits if your position sizing isn't managed carefully.
How do you factor contract rollovers or term structure shapes into your active setups? Share your thoughts below!
