How to Write a Trading Plan for Futures: A Step-by-Step Template

Key takeaways

• A trading plan is a written set of rules that decides, before the session, what you trade, when, on which setups, with how much risk and how you review the results.
• Each rule should be precise enough that someone else could check from your chart and your records whether you followed it.
• Risk rules come first: a fixed risk per trade, a position size calculated from the stop distance and the point value, and a daily loss limit that ends the session.
• A plan is revised on a schedule, from journal data, never in the middle of a losing day.

What a trading plan is: the short answer

A trading plan is a written set of rules that settles, before the session starts, what you trade, when you trade it, which setups you take, how much you risk and how you review the results. Its job is to move the important decisions out of the moment, when prices are moving and emotions run high, and into a calm moment when you can think them through.

A plan does not make a method profitable, and it does not tell you where the market is going. What it does is make your behaviour consistent and measurable. When every trade follows the same written rules, your results describe your method; when the rules change from trade to trade, they mostly describe your mood. The CFTC’s basic advice to anyone speculating in futures is to know how much you can afford to lose before starting, and the plan is where that amount turns into concrete limits.

The six steps below suit intraday and short-term futures traders, but the structure works on any horizon: markets, hours, setups, risk, limits and review.

Step 1: Choose your markets and contracts

Start narrow. A plan that covers one or two contracts is easier to follow and to evaluate than one that jumps between stock indices, metals, energy and currencies. Each market has its own rhythm, its own reaction to news and its own busy hours, and learning them takes time.

For every contract you list, write down the facts that turn a distance on the chart into money: the tick size, the value of one tick and of one point, the trading hours and the contract month you trade. These values are set by the exchange, so they are identical at every broker; the guide to futures tick value lists them for the most traded contracts.

• The symbols you trade, and whether you use the E-mini or the micro version of each.
• Tick size, tick value and point value for each contract.
• The contract month you trade and the rule for rolling to the next one.
• The markets you do not trade, even on days when they move a lot.

Step 2: Fix your trading hours and news rules

Write down when you trade, not only what. Most index, metal and energy futures trade electronically for nearly the whole day, but liquidity and volatility are far from constant: the opening of the regular US stock session, the London open and scheduled economic releases behave very differently from quiet overnight hours. Choose the window in which your setups appear and in which you can watch the screen without interruption.

Then decide how you handle scheduled events. The usual choices are to be flat before a major release, to trade a reduced size around it, or to wait until the first reaction has passed. Check the economic calendar during your pre-session routine, so the rule is applied before the event rather than remembered after it.

• Trading window: the start and end of the period in which you open new positions.
• Last entry time: no new trade after a set time, so positions are not opened in a hurry before you leave.
• News rule: what you do before, during and after each high-impact release.
• Away rule: no open position while you cannot monitor it, unless the plan explicitly allows it with a resting stop.

Step 3: Write setup rules that someone else could check

This is the core of the trading plan, and the part most often written too vaguely. A rule such as “buy strength near support” cannot be checked afterwards, so it cannot be evaluated either. A useful rule describes the context, the trigger, the order you use, where the stop goes, how you exit and when the setup is cancelled.

Whether your setups come from price action, volume profile levels or order flow (see order flow vs price action for how the two approaches differ), the test is the same: could another trader look at the chart and at your records and say whether you followed the rule?

• Context: the market condition required before you look for the setup, such as price above or below a reference level, or a clearly defined range.
• Trigger: the exact event that makes the trade valid, visible on the chart or in the order book.
• Entry order: market or limit, and why; the trade-offs are explained in market vs limit orders.
• Stop: the price at which the trade idea is proven wrong, decided before entry.
• Exit: a profit target, a trailing rule, a time limit, or a combination of them.
• Cancellation: conditions that void the setup, such as a release due within minutes or a spread much wider than usual.

Keep the list short. Two or three well-defined setups give you enough trades to measure each of them; ten loosely defined ones give you a collection of exceptions.

Step 4: Set your risk per trade and position size

Write the risk per trade as an amount of money or a fixed fraction of the account, decided in advance and changed only at scheduled reviews. Many traders keep it small enough that a long losing streak, which every method goes through sooner or later, leaves the account able to keep trading.

The number of contracts then follows from a short calculation: the risk per trade divided by the risk of one contract, where the risk of one contract is the stop distance in points multiplied by the point value. Round down, and skip the trade when not even one contract fits. The full method, slippage included, is in how to calculate futures position size, and the wider framework of margin, gaps and correlated positions in futures trading risk management. The plan itself only needs the rule and the numbers you chose.

• Risk per trade: a fixed amount, or a fixed percentage of the account.
• Contracts = risk per trade ÷ (stop distance in points × point value), rounded down.
• Expected slippage added to the stop distance before dividing.
• Position size never taken from the margin your broker allows.

Step 5: Add a daily loss limit and other circuit breakers

Risk per trade protects you from one bad trade; a daily loss limit protects you from a bad day. Set it in money, often as a small multiple of the risk per trade, and write what happens when it is reached: close every position, stop placing orders and complete the journal. The decision to stop has to be taken in advance, because after several losses it would be taken in the worst possible state of mind.

Other circuit breakers work the same way: a maximum number of trades per session, a pause after a set number of consecutive losses, and a weekly or monthly loss level that triggers a full review before trading resumes. Platform features help enforce exits. In NinjaTrader 8, an ATM Strategy is a set of user-defined rules that creates and manages stop loss and profit target orders for an open position, so the protective stop is working as soon as the entry is filled.

• Daily loss limit in money, with the action to take when it is reached.
• Maximum number of trades per session.
• Pause rule after consecutive losses.
• Weekly or monthly drawdown level that triggers a written review.

Step 6: A pre-session checklist and a review routine

A plan only helps if it is applied every day and checked regularly. A short pre-session checklist makes the first part automatic; a journal and a scheduled review make the second part possible.

• Economic calendar checked and the news rule set for the day.
• Key reference levels marked on the chart of each contract.
• Platform, data connection and order templates verified.
• Risk per trade, daily loss limit and maximum number of trades written down for the session.

After the session, record every trade with its planned risk, its actual result and whether each rule was followed. Once a week, review those records: compare planned and actual risk, count the rule breaks and look at results setup by setup. The trading journal guide explains what to record and which simple statistics to track.

Change the plan on a schedule, not during a session. When a review shows a problem, change one rule at a time, test it in simulation or with minimal size, and note the date of the change so that results before and after can be compared.

A one-page trading plan template

The table sums up the plan on a single page. Each line should hold a concrete answer, not an intention, and the last column shows how you will know from your records whether the rule was respected.

Common mistakes when writing a trading plan

Most weak plans fail in the same few ways. They are either too vague to be checked, or so loose that any trade can be justified after the fact.

• Rules that describe a feeling rather than an observable condition.
• A risk section without numbers, or with numbers that change after each loss.
• Too many markets and setups to evaluate any of them properly.
• No written action for the moment the daily limit is reached.
• Rewriting the plan after every losing day instead of at scheduled reviews.
• Treating the plan as finished, when it is a working document that improves through the review.

Put it into practice

• Trading journalLog your trades in your browser and import exports from 12 platforms.
• Futures position size calculatorTurns a stop in ticks or points into a number of contracts for the risk you choose, using official tick values.
• Free backtesterTest a rule-based strategy in your browser, on public data series or your own NinjaTrader exports.

Frequently asked questions

Sources

1. Basics of Futures Trading — CFTC
2. Investor Education & Resources — National Futures Association
3. ATM Strategy — NinjaTrader Help Guide

Read next

All articles in this section : Method and analysis →