1. Understand the nature of the parables.
Parables are tools to compare something physical to something spiritual. Jesus begins several parables by saying “The Kingdom of God is like…” so he could tie an abstract concept (the Kingdom of God) to something more concrete and visible (like a mustard seed in Matthew 13:31-32).
Jesus chose to teach in story form because stories engage the mind and emotions of listeners like no other form of teaching. One great example of this is when Jesus painted a beautiful picture of what “loving your neighbor as yourself” meant when he told the Parable of the Good Samaritan (Luke 10:29-37).
2. Understand the purpose of parables.
Jesus taught with parables for two main purposes: to explain truth to some (see Luke 10:36-37) and to keep truth hidden from others (see Mark 4:10-12 below). For those eager to follow God, parables were memorable illustrations of a kingdom principle. For those opposed to God’s plans, the meaning of the parables would be hidden in a form of judgment.
“And when he was alone, those around him with the twelve asked him about the parables. And he said to them, “To you has been given the secret of the kingdom of God, but for those outside everything is in parables, so that “they may indeed see but not perceive, and may indeed hear but not understand, lest they should turn and be forgiven.” Mark 4:10-12
3. See the parable in its proper context.
Often times a parable has a brief introduction that will greatly affect its meaning and interpretation. Luke 18:1 shares a key for interpreting the parable that followed when it said, “And he told them a parable to the effect that they ought always to pray and not lose heart. Other times, a parable’s context will inform us that it is directed toward a certain group of people (for example the Pharisees in Luke 15).
Parables are often grouped thematically, and understanding the main thread that ties related parables together can shed light on their overall meaning and interpretation. Luke 15 groups three parables together (the Parable of the Lost Sheep, the Parable of the Lost Coin, and the Parable of the Prodigal Son) to respond to the Pharisees and scribes who were hypocrites that did not understand the grace of God.
4. Remember the cultural gap.
Some of the images and metaphors have rich meaning to people in Jesus’ time that are not as easy to recognize for those living in the 21st century. The Parable of the Ten Virgins (Matthew 25:1-13) makes much more sense when one understands the Jewish marriage customs present at the time of Jesus. A good study Bible will likely have helpful notes to aid you in your study.
5. Parables usually have one main point.
Our understanding of a parable and its details should all flow from the main point (or points). This is a crucial step, because the main point of the parable is the reason Jesus said it in the first place!
Some recommended questions for finding the main point are:
1. Who are the main characters?
2. What occurs at the end?
3. What occurs in quotation marks?
4. Who/What is the focus of the story? 
6. Take notice of surprise details.
Certain parables have shocking and unexpected twists in the story that help us understand the point Jesus was trying to make. Although a careful reading will usually expose the special details, sometimes these details are hard to pick up on due to cultural differences and our familiarity with the parables.
An example of an important and surprising detail is found in the Parable of the Unforgiving Servant (Matthew 18:23-35). The surprise detail of this parable is the difference in the amounts of money forgiven by the king and by the servant (thousands of dollars compared with millions of dollars), which shows the great magnitude of God’s forgiveness of us and how that should lead us to forgive others.
7. Not every minor detail has significant meaning.
Because parables are stories, they sometimes need supporting information in order for the main idea of the parable to make sense and have its power.
For example, in the Parable of the Ten Virgins, the story shares that five virgins were wise and the other five foolish. It would be wrong to conclude that 50% of people are wise and 50% of people are foolish. The fact that there were ten virgins total with five wise and five foolish is an inconsequential detail that merely helps the story progress. Often times pressing on insignificant details can make the story unravel and make one miss the entire point of the story.
8. Notice “stock imagery” in the parables.
“Stock imagery” is a term coined by Robert Plummer for many of the images used repeatedly throughout the parables. Many times repeated images are paralleled in the Old Testament and would have been common spiritual ideas understood by Jesus’ original hearers.
For example, whenever there is a Master/Judge/King figure in the parables, that signifies God, while sheep/servants/workers illustrate followers of God.
9. The ending of parables is very important.
While longer parables share a lot of important details along the way, the key to understanding the implications of the parable is often found in its conclusion. In the parable of the Wheat and the Tares (Matthew 13:24-30), the ending reveals what happens to the wheat and tares respectively and shows the ultimate purpose of the parable which is to indicate that God will judge who is really part of the church at the final judgment.
10. Be careful with allegorical interpretations of parables.
There have been some throughout church history who have thought that the meaning of parables was hidden and unable to be explained without applying special meanings to the text. The problem with this is that they normally disregarded the plain reading of Scripture and offered confusing ideas from the mind of the interpreter.
An example of this is Origen’s interpretation of the Good Samaritan. He reads several details into the text: the man walking down the road signifying Adam, the priest signifying the Law, the Levite signifying the Prophets, the donkey signifying the body of Christ that bore our sins, and the Samaritan signifying what Christ did for us.
There is no basis for such an interpretation. It is much easier to understand when you remember the context: Jesus used the parable to answer a man’s question, “Who is my neighbor?” The Great Reformer Martin Luther called some allegorical interpretations of the parables “amazing twaddle” and “altogether useless.” Avoid these types of interpretations!
As you dig into the deep riches of Christ’s parables, it is our prayer that you develop a deeper grasp on the grace of God, an amplified experience of the Kingdom of God , and a hunger to follow hard after Christ.
 A Basic Guide to Interpreting the Bible: Playing by the Rules, Robert Stein
Also check out:
“Interpreting Parables” by Michael Vlach / theologicalstudies.org.
“Interpreting Parables” by Michael Vlach / theologicalstudies.org.
The ESV Study Bible | 10 Reasons to Read the ESV Study Bible
Plummer, Robert: 40 Questions about Interpreting the Bible
Snodgrass, Klyne: Stories with Intent: A Comprehensive Guide to the Parables of Jesus