What is a stock futures chart?


Quick Answer

A stock futures chart tracks premarket trading activity for market indexes such as the Dow Jones Industrial Average, the Nasdaq and the S&P 500, according to CNN Money. The data includes premarket trading activity for individual stocks and world stock markets.

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Full Answer

Investors use stock futures to determine how well the indexes perform at the market open, explains Investopedia. For example, if a stock futures chart shows the Dow trading higher during premarket hours, it generally represents that the Dow trades higher at the market open and throughout the course of the trading day. Essentially, futures mirror the market indexes they follow, so investors use the data as precursors to the day’s trading events.

A futures contract is a legally binding financial document requiring buyers to purchase assets and obligating sellers of futures contracts to sell assets, such as financial instruments and commodities, Investopedia reports. The term “futures” represents a predetermined date and price in the future that outlines when buyers and sellers execute the trades. The actual futures exchanges include equities from the Dow, Nasdaq, S&P 500 and the Russell 2000 or physical commodities traded on the Chicago Mercantile Exchange. Stock futures charts are synonymous with the futures market as a whole, and the charts do not represent the singular act of trading stock futures but represent the trading of all futures contracts.

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