Sample Futures Trading Plan

Learning to trade is about observation, study and practise. You should be able to incrementally build upon your skill and develop as a trader. So how come so many traders hit an invisible wall? There are many possible reasons for this but one is that they don’t have a strong futures trading plan. I’ll give you a brief outline of why this is such an important factor in achieving trading success and then I’ll give you a sample futures trading plan to flesh out for yourself.

Point of Reference

Everything which we do in trading tends to be developed from theory and observation of some kind of trading activity/reaction given a certain set of circumstances. Information, logic and past experience is what we lean on in order to make decisions about what might be a profitable strategy going forward.

By having a thorough futures trading plan and knowing exactly what your trades look like (and also therefore, what are not your trades), you will be able to understand how your methods are working over time and better understand the problems faced. It may be that a perfectly good plan is being sabotaged by poor trader execution for example. But you won’t know unless you have a plan. If your trades are random in nature, it’s much harder to learn from them.

Chimp Memory

The plan also needs to cover how you record your data. “I have a trade log from my broker, so why bother” I hear you say. Well, there’s far more information to keep record of (see examples in the Sample Futures Trading Plan). Error rates and psychology for example are crucial – and does your broker tell you that on this  trade you hesitated on entry and therefore had to take a poor price, or that you jumped into another trade because you didn’t want to miss out?

You may be thinking right now that actually, you know what your issues are. You know where your problems lie. Well that may be true to some extent. But think of this for a minute – when you take trades where you make mistakes and are under a great deal of mental duress, do you really believe your memories are being formed objectively? Do you really believe that you’ll be able to look at a broker trade log months from now and know what was the driving force behind your decision making (or lack thereof) on a particular trade?

Anyone who has read “The Chimp Paradox”  will know that this is pretty unlikely to say the least. Memories, experience and lessons learned will be processed by your chimp if you are in chimp mode. So even when you are thinking about trades in human mode later on, the information isn’t likely to be objective.

Incremental Futures Trading Plan Improvements

If you don’t really know what it is that you need to cover in a futures trading plan or you really don’t have specific strategy methods down right now, don’t worry. I understand that this is a hard thing to wrestle with but the real key to this is that you start somewhere. You see, a proper futures trading plan should be a living and breathing thing – it develops over time and feeds into itself. By getting the information down and starting to lean on it (and learn from it), you’ll start to see what adjustments and alterations are needed. But you have to start somewhere.

Sample Futures Trading Plan

With all of this said, I’ll now get to the Sample Futures Trading Plan. Please bear in mind that this began as a discussion I had with a trader, which I then elaborated on a little and then decided to turn it into a post in order to act as a reference for those who have yet to tackle their own plan. It’s by no means complete. It’s there to give you some ideas and you should flesh it out to whatever extent you are currently able to.

Trading successfully is about trading professionally. If you haven’t yet created a thorough futures trading plan, I urge you to use this post as a motivation to start one now. See below for download link.