How to Read Futures Charts

Do you know how to read futures charts? Chart reading for any market is essential. It gives you a wealth of information. For example, support and resistance along with patterns.

As a result, you have a much better idea of where a stock is going. While it's not 100% fool proof, it helps the success of your trading immensely. 

How to Read Futures Charts

  • If you want to trade futures, you have to know how to read futures charts. When we wish to trade futures, we're lucky enough to have the abundance of the info provided by their quotes and charts. The charts show us in real-time the changes in supply and demand. When we're good at reading the signs that are provided by these charts, we're more likely to make profits in our trades. Understanding how to read these charts is vital to make an informed trading decision. 

1. Future’s Graphs and Quotes

No matter if you're looking at futures or another type of asset, the basics are the same. In fact, these will help you to read futures charts.

You'll see the time date on the X-axis (the horizontal one) and the price information on the Y-axis (the vertical one).  

The time period that you're looking at can change depending on the view from seconds up to minutes, days, weeks, or months.

You can use the different time frames to see if your indicators agree; the more so, the better the trend. There are ten pieces of information that are included with a quote as well.

2. What Are the 10 Pieces to Read Futures Charts?

  1. The Open: The day’s first transaction price
  2. The Close aka the Settlement: The price of the day’s last transaction
  3. The High: The highest price paid for the contract during the session
  4. The Low: The lowest price paid for the contract during the session.
  5. The Change: The difference between the previous session’s close and the current session’s close.  Will be quoted in dollar difference as well as a percentage difference. 
  6. The 52-Week High and Low: The previous year’s highest and lowest prices paid for the contract.
  7. The Open Interest: The current number of futures contracts that are open.
  8. The Session’s Volume: The total number of contracts that were bought/sold during the session.
  9. The Exchange: Where the contracts are traded (i.e. the Chicago Board of Trade CBOT).
  10. The Contract/Ticker code: A futures contract has a name/code explaining the asset and it’s expiration date. The ticker code is made up of three parts; the first part is a one to three-letter code that identifies the particular asset, crude oil is CL. The second part is a one-letter designation to identify the month of expiry, and the third is the year of the expiration.

These 10 things will help you know how to read futures charts. Whether a tick chart or not.

3. The Months Ticker Code Symbols 

The months designation of a ticker code are a bit unusual, so here's a chart to help you identify the correct month code, to misidentify could be a big financial mistake:

Month

Month Code

January

F

February

G

March

H

April

J

May

K

June

M

July

N

August

Q

September

U

October

V

November

X

December

Z

4. Example of a Ticker Code

Here is a simple example of a ticker code:

NQH21  the first two letters “NQ” stand for the Nasdaq 100 E-mini future, the “H” indicates the month of March, and the “21” indicates the year 2021, some charts may only put a “1” instead of a “21”.

Remember, the contracts that are closer to expiry are shown at the top of a quote chart, while those further from expiry are further down the list.  Usually, the further out the contract is from its expiry, the less trading volume it has.

How Do You Read a Trade Chart?

  • Do you know how to read futures charts? You need to know how to read any type of trading chart if you're going to be a good trader. That starts with candlesticks. They help you find patterns along with support and resistance. Next you can learn how to read moving averages. These can help with direction as well as support and resistance. 

1. Candlesticks

If you want to know how to read futures charts, start with candlesticks. When looking at bars or candlesticks, each will show the opening and closing prices as well as the highs and lows for that time period. The top line (or where the wick ends) is the high.

And the top of the candle is the open if red and close if green. The bottom of the candle is the open if green and close if red. And the bottom wick end is the low for the period. 

If you can spot bearish or bullish candlesticks, then you're well on your way to knowing how to read futures charts.

How To Read Futures Charts

If you see a few greens in a row then the price is going up and if you see a few red then the price is going down. Different candlestick patterns can indicate different things happening to the market.  Knowing these is important.

Two common patterns are the W and the M. The W is made up of two lows at the same level with a high point between them. The W shape can indicate that the price will climb once the high point has been surpassed.  

While the M shape is the reverse, two highs with a midpoint that is lower, indicating that the high has been reached, and a downtrend will occur if the middle point is passed.  These two candlestick patterns can help you to identify when to enter and exit a position. 

On top of candlesticks, you can add various trendlines. These are ideal for helping to determine the future of the future. If a straight line can connect three highs or lows, then you have identified a trend. 

2. Warnings 

You should be aware that the majority of free quotes are delayed by 10-20 minutes.  For this reason, you need to use a live info trading platform or service. 

Also, all indicators indicate the past and are not definite indicators of the future. You need to have more than just the indicator to make a reliable trading decision. 

Knowing the warnings can be a great help with knowing how to read futures charts. In fact, if you want to know how to read futures charts, then make sure to take our futures trading course.

How to Read Futures Charts Summary

Have you learned how to read futures charts? Quotes and charts of futures can provide you a lot of good information. How you use this to help you trade is up to you.  

Ensure that you never invest too much in one single transaction. And have a reason for trading more than just gut instinct or the chart. As always, good luck with your trading!!!!

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