A well-structured trading plan is the foundation of successful futures trading. It transforms vague ideas into concrete actions, reduces emotional decision-making, and provides a framework for consistent improvement. This guide will walk you through the process of creating a comprehensive trading plan tailored to futures markets.

Why You Need a Trading Plan

Trading without a plan is like navigating unfamiliar territory without a map. A trading plan:

  • Provides clear guidelines for decision-making
  • Reduces emotional trading
  • Creates accountability
  • Enables objective performance assessment
  • Facilitates continuous improvement

Essential Components of a Futures Trading Plan

1. Personal Assessment

Begin by understanding yourself as a trader:

  • Trading Goals: Define specific, measurable, achievable, relevant, and time-bound (SMART) goals
  • Available Capital: Determine how much capital you can dedicate to futures trading
  • Time Commitment: Assess how much time you can realistically devote to trading and market analysis
  • Risk Tolerance: Honestly evaluate your psychological and financial capacity for risk
  • Knowledge Level: Identify your strengths and knowledge gaps regarding futures markets

Example: Personal Assessment Section

Trading Goals: Generate 15% annual return on capital with maximum 10% drawdown. Develop proficiency in E-mini S&P 500 futures within 6 months.

Available Capital: $50,000 dedicated trading capital, separate from emergency funds and long-term investments.

Time Commitment: 2 hours for morning analysis, active trading from 9:30 AM to 11:30 AM ET, 1 hour for end-of-day review.

Risk Tolerance: Comfortable with 1% risk per trade, maximum 5% account drawdown before reassessment.

Knowledge Level: Strong understanding of technical analysis, need improvement in market internals and order flow analysis.

2. Market Selection

Identify which futures markets you will trade:

  • Market Selection Criteria: Liquidity, volatility, trading hours, margin requirements
  • Primary Markets: Your main focus markets
  • Secondary Markets: Markets you'll monitor for opportunities
  • Correlation Awareness: Understanding how your chosen markets relate to each other
Market Symbol Trading Hours Typical Volatility Initial Margin Priority
E-mini S&P 500 ES Nearly 24 hours Medium-High ~$12,000 Primary
Crude Oil CL Nearly 24 hours High ~$6,000 Secondary
10-Year Treasury Note ZN Nearly 24 hours Medium ~$3,000 Secondary

3. Trading Strategy

Define your approach to the markets with clear rules:

  • Strategy Type: Trend-following, mean-reversion, breakout, etc.
  • Timeframes: Which chart timeframes you'll use for analysis and execution
  • Technical Indicators: Specific indicators and their settings
  • Chart Patterns: Patterns you'll look for
  • Fundamental Considerations: How economic data affects your decisions

4. Entry Criteria

Establish specific conditions that must be met before entering a trade:

  • Setup Conditions: Market conditions that create potential opportunities
  • Trigger Events: Specific signals that prompt trade execution
  • Confirmation Factors: Additional elements that strengthen the case for entry
  • Entry Types: Market orders, limit orders, stop orders
  • Pre-Entry Checklist: Final verification before execution

Example: Entry Criteria for Trend-Following Strategy

Setup Conditions:

  • Daily chart showing established trend (price above/below 50-day EMA)
  • 4-hour chart aligned with daily trend direction
  • No major economic announcements within next 2 hours

Trigger Events:

  • Price pulls back to 21-period EMA on 1-hour chart
  • RSI(14) between 40-60 for long setups, 40-60 for short setups
  • Bullish/bearish candlestick pattern forms at support/resistance

Confirmation Factors:

  • Volume increasing on price movement in trend direction
  • Market internals supporting directional move
  • Key support/resistance levels holding

5. Exit Criteria

Define how you'll exit trades, both winning and losing:

  • Stop-Loss Strategy: How and where you'll place stop-loss orders
  • Profit Targets: Methods for determining price targets
  • Trailing Stops: Rules for adjusting stops as trades move in your favor
  • Time-Based Exits: Maximum holding periods
  • Partial Exit Rules: Strategy for scaling out of positions

6. Position Sizing and Risk Management

Establish rules to protect your capital:

  • Risk Per Trade: Maximum percentage of capital risked on any single trade
  • Position Size Calculation: Formula for determining contract quantity
  • Maximum Exposure: Limits on total capital at risk across all positions
  • Drawdown Rules: Actions to take after reaching specific drawdown levels
  • Correlation Risk: Adjustments for correlated positions

Position Size Formula

Position Size (contracts) = (Account Size × Risk Percentage) ÷ (Risk per Contract)

Where:

  • Account Size = Your trading capital
  • Risk Percentage = Maximum risk per trade (e.g., 1%)
  • Risk per Contract = (Entry Price - Stop Loss Price) × Contract Multiplier

Example: $50,000 account, 1% risk, ES futures with entry at 4500, stop at 4480, $50 multiplier

Risk per Contract = (4500 - 4480) × $50 = $1,000

Position Size = ($50,000 × 0.01) ÷ $1,000 = 0.5 contracts (round down to 0 or use micro contracts)

7. Trading Schedule and Routine

Establish a structured approach to your trading day:

  • Pre-Market Routine: Preparation activities before markets open
  • Trading Hours: Specific times you'll be actively trading
  • Post-Market Review: Analysis and journaling after the session
  • Weekly/Monthly Reviews: Schedule for broader performance assessment
  • Market Conditions: Adjustments based on volatility or news events

8. Record Keeping and Performance Analysis

Define how you'll track and evaluate your trading:

  • Trading Journal Format: Structure for recording trade details
  • Performance Metrics: Key statistics to track (win rate, profit factor, etc.)
  • Review Schedule: Regular times for analyzing performance
  • Improvement Process: Method for implementing lessons learned

Example: Trading Journal Template

Trade Details:

  • Date and Time
  • Market and Contract Month
  • Direction (Long/Short)
  • Entry Price and Reason
  • Position Size and Risk Amount
  • Exit Price and Reason
  • Profit/Loss (points and dollars)
  • Trade Duration

Analysis:

  • Market Conditions
  • Emotional State Before/During/After
  • What Worked Well
  • What Could Be Improved
  • Plan Adherence (Yes/No, Explanation)
  • Screenshots of Setup and Execution

9. Psychological Guidelines

Address the mental aspects of trading:

  • Emotional Triggers: Identify personal triggers and mitigation strategies
  • Focus Techniques: Methods to maintain concentration
  • Stress Management: Approaches for handling high-pressure situations
  • Discipline Reinforcement: Techniques to maintain plan adherence
  • Recovery Procedures: Steps to take after significant losses

10. Continuous Improvement Framework

Establish a system for evolving your trading approach:

  • Learning Resources: Books, courses, mentors for ongoing education
  • Strategy Testing: Process for evaluating new ideas
  • Plan Revision Schedule: Regular times to update your trading plan
  • Skill Development: Specific areas for improvement

Implementing Your Trading Plan

Start Small and Build

Begin with reduced position sizes while you adapt to following your plan. Gradually increase as you demonstrate consistency in execution.

Use Checklists

Create pre-trade, during-trade, and post-trade checklists to ensure you're following your plan at each stage.

Pre-Trade Checklist Example

  • Is this setup aligned with my defined strategy?
  • Have all entry criteria been met?
  • Have I identified my exact entry price?
  • Have I determined my precise stop-loss level?
  • Have I calculated my position size according to my risk rules?
  • Have I identified my profit target(s)?
  • Is this trade consistent with current market conditions?
  • Have I checked the economic calendar for potential disruptions?
  • Am I emotionally balanced and focused?
  • Does this trade fit within my overall exposure limits?

Review and Adapt

Regularly review your trading results against your plan. Look for patterns in both successful and unsuccessful trades.

Common Trading Plan Pitfalls

  • Excessive Complexity: Creating rules so complicated they're difficult to follow
  • Vague Criteria: Using subjective terms like "significant" without clear definitions
  • Ignoring Psychology: Focusing only on technical aspects without addressing emotional factors
  • Unrealistic Expectations: Setting goals that create pressure to overtrade or take excessive risks
  • Lack of Flexibility: Creating a rigid plan that doesn't adapt to changing market conditions

Sample Trading Plan Template

I. Personal Assessment

  • Trading Goals
  • Available Capital
  • Time Commitment
  • Risk Tolerance
  • Knowledge Assessment

II. Market Selection

  • Primary Markets
  • Secondary Markets
  • Trading Hours
  • Market Characteristics

III. Trading Strategy

  • Strategy Overview
  • Timeframes
  • Technical Indicators
  • Chart Patterns
  • Fundamental Considerations

IV. Entry Rules

  • Setup Conditions
  • Trigger Events
  • Confirmation Factors
  • Order Types

V. Exit Rules

  • Stop-Loss Placement
  • Profit Targets
  • Trailing Stop Strategy
  • Time-Based Exits
  • Scaling Out Rules

VI. Risk Management

  • Risk Per Trade
  • Position Sizing Formula
  • Maximum Exposure
  • Drawdown Rules
  • Correlation Adjustments

VII. Trading Schedule

  • Pre-Market Routine
  • Active Trading Hours
  • Post-Market Review
  • Weekly/Monthly Assessment

VIII. Record Keeping

  • Trade Journal Format
  • Performance Metrics
  • Review Process

IX. Psychological Guidelines

  • Emotional Management
  • Focus Techniques
  • Discipline Strategies

X. Improvement Framework

  • Learning Resources
  • Testing Methodology
  • Plan Update Schedule

Conclusion

A well-crafted trading plan transforms futures trading from a series of reactive decisions into a structured business operation. While creating a comprehensive plan requires significant effort, it provides the framework necessary for consistent performance and continuous improvement.

Remember that your trading plan is a living document. As you gain experience and market conditions evolve, your plan should adapt accordingly. The most successful futures traders regularly review and refine their plans, maintaining the discipline to follow their rules while having the flexibility to incorporate new insights.

Final Thoughts

"Plan your trade and trade your plan" is more than just a catchy phrase—it's the foundation of professional trading. By developing and following a comprehensive trading plan, you transform unpredictable market activity into a structured process that can be analyzed, measured, and improved over time.