Selecting the Best Futures Trading Charts for Your Strategy | StoneX (2024)

In the contemporary marketplace, technical analysis is king. The study of price action itself is the backbone of many trading strategies and the go-to methodology for many active traders. Because of the widespread popularity of technical analysis, futures trading charts have become an essential part of everyday trading.

However, pricing charts aren’t one-size-fits all. To build a useful and valuable chart, you must take several factors into account. Selecting the right type and duration of chart and aligning strategic objectives to the chart’s functionality are the keys to getting the most out of any pricing chart.

Selecting Futures Trading Charts

When it comes to developing a robust futures trading chart, these are the two primary considerations:

• Type: Selecting the best chart type for the job is a critical aspect of technical trading. Each type excels in a unique area and is specifically designed for certain strategies and methodologies. A few of the most commonly used types are candlestick, open-high-low-close (OHLC), line, and market profile charts.

• Duration: The chart’s periodicity is a key element of its functionality. Increments are typically assigned according to time, ticks, or volume. It’s critical that your charts feature a duration that complements your trading style. If you’re a long-term investor, then daily, weekly, monthly, and yearly charts are appropriate. Conversely, intraday traders typically focus on increments measured in minutes or ticks.

It’s also essential that you select a chart type and duration that harmonizes with your strategic objectives. Otherwise, the integration of subpar futures trading charts into your market game plan can undermine strong decision-making. Subsequently, undue latencies and clutter can hinder competent trade. However, by applying a little due diligence, you’ll be able to align your chart’s functionality to your strategic objectives.

Any trades are educational examples only. They do not include commissions and fees.

Building a Strong Chart

To illustrate the process of developing a useful chart, assume that Erin the E-mini S&P 500 trader has decided to adopt a technical analytical framework. Erin is an intraday scalper who aims to profit from momentum-based trading strategies.

To scalp successfully, Erin decides to examine price action on multiple intraday timeframes. For her, profitability hinges upon getting in on directional moves in pricing as they develop. To do so, futures trading charts that highlight patterns clearly are ideal. Accordingly, Erin builds a collection of charts based on the following parameters:

• Chart type: She selects Japanese candlestick charts. This chart type is extremely useful in pattern recognition and identifying pending breakouts.

• Duration: Intraday time frames are preferable because they give a detailed view of evolving price action. Erin elects to focus on 1-minute, 5-minute, 15-minute, and 30-minute durations.

• Strategic objectives: By selecting Japanese candlestick charts on multiple intraday durations, Erin has constructed a framework for examining price action and current momentum. She’s now ready to apply various technical indicators and tools to her collection of futures trading charts.

Interested in Learning More About Charting?

The primary task of building any chart is to align strategic objectives to your chart’s functionality. Once you accomplish this, price action will be placed in a more manageable context. Without alignment, the chart may fail to provide you with useful information in a timely fashion. Ultimately, decision-making and performance will suffer.