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Selecting the Best Futures Trading Charts for Your Strategy

January 27, 2020 by Daniels Trading| Tips & Strategies

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.

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.

If you’re interested in learning more about the ins and outs of charting, a free 14-day demo of Daniels Trading’s flagship platform can help. Featuring robust functionality and a collection of invaluable technical tools, dt Pro is a sophisticated charting platform designed to meet the needs of any active futures trader.
Demo DT Pro Today

Filed Under: Tips & Strategies

About Daniels Trading

Daniels Trading is division of StoneX Financial Inc. located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading was built on a culture of trust committed to a mission of Independence, Objectivity and Reliability.

Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

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Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved

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