Strategic Trading Plan
Trading futures without having sound futures trading strategies in place is like driving cross country without a map. The chances are good that you'll never reach your destination which, in the case of trading futures, is to move in and out of a position and earn a profit.
Trading strategies abound and everyone claims that their's is the best one. The truth is, any fiscally sound and logical trading strategy is "good", but only a trading method that works for your particular circumstances is the "best".
What is a trading strategy?
A trading strategy is a set of rules which define when you will buy and when you will sell. These are RULES and not merely "suggestions". If your strategy consistently fails then you need to develop a new trading strategy rather than simply ignoring your current one.
When you are trading futures it is essential that you not let your emotions control your trading methods. Trading strategies remove any chance of your being controlled by anything other than the trade that you are focused on.
Steps to building a trading strategy
When trading futures your first step is to establish a trading goal. This goal focuses on how much money you are willing to risk every day and how much return you want to earn. This "start and stop" point is your #1 inviolate rule. Your trading method absolutely must require you to stop buying when you have your maximum amount of risk money in play and, if you are day trading futures, to close out all of your positions when you have reached your daily profit goal.
The next step in developing a futures trading strategy is to define your trading "style". Your style will be determined, to a great extent, by your trading goal that you previously established. Typical futures trading styles include day trading, swing trading and position trading.
After that you need to focus on your trading technology. How are you going to identify which futures trades you are going to get in on? What software will you use to give you the key data that it takes to make decisions? Your trading platform is a key part of your trading strategy and it needs to "do business" the way that you do business.
If you aren't experienced enough to develop your own futures trading strategy, then invest in buying a strategy from a futures trading guru whose trading methods you admire and can live with.
