How to create a simple futures trading plan?

Define Your Trading Objectives

1. Determine whether your primary goal is hedging exposure, generating consistent income, or pursuing directional speculation.

2. Specify the asset class you intend to trade—BTC, ETH, or altcoin perpetuals—and confirm exchange compatibility with required leverage tiers.

3. Set a maximum acceptable drawdown per trade, expressed as a fixed percentage of your total futures wallet balance.

4. Establish a daily loss limit that triggers immediate session termination, preventing emotional decision-making during volatility spikes.

5. Record your risk-reward ratio expectations before entering any position; avoid setups where potential reward is less than twice the defined risk.

Select Entry and Exit Criteria

1. Use price action confluence—such as breakouts above descending trendlines combined with volume surges—to validate entries.

2. Require at least two independent indicators to align: for example, RSI exiting oversold territory while price crosses above the 50-period EMA.

3. Place stop-loss orders at structural levels—swing lows for longs, swing highs for shorts—not arbitrary pip distances.

4. Define profit targets using measured move projections from prior consolidation ranges or Fibonacci extensions from impulsive waves.

5. Avoid moving stops into profit unless triggered by a predefined trailing mechanism tied to ATR multiples or fractal shifts.

Manage Position Sizing Rigorously

1. Calculate position size based on stop distance and account risk per trade—never allocate more than 1–2% of equity to a single futures contract.

2. Adjust notional value dynamically when volatility expands: reduce size if the 14-day BTC futures IV rises above its 90th percentile.

3. Refuse to open new positions if existing open interest exceeds 75% of the exchange’s liquidation threshold for that symbol.

4. Cap total leveraged exposure across all active contracts at five times your isolated margin balance.

5. Rebalance position sizes weekly using updated equity figures—not initial capital—to maintain proportional risk alignment.

Maintain Real-Time Risk Monitoring

1. Track real-time funding rate differentials across exchanges to detect arbitrage windows or unsustainable carry imbalances.

2. Monitor liquidation heatmaps hourly during high-impact events like Fed announcements or ETF approval rumors.

3. Log every executed order—including fill price, slippage, and time stamp—in a dedicated spreadsheet updated manually after each trade.

4. Cross-check your margin utilization against exchange-defined maintenance thresholds every 15 minutes during volatile sessions.

5. Disable auto-deleveraging triggers in your exchange settings and rely solely on manual stop placement to retain control over exit timing.

Common Questions and Answers

Q: Can I use the same plan for both quarterly and perpetual futures?Perpetual contracts require constant attention to funding rates and basis decay, while quarterly expiries demand precise roll timing and convexity adjustments—these are structurally distinct instruments requiring separate rule sets.

Q: What happens if my stop-loss gets triggered during a flash crash?Exchange matching engines may fill at significantly worse prices than intended; always verify historical slippage data for your chosen symbol and venue before deploying stops near known liquidity voids.

Q: Should I adjust my plan during low-volume weekends?Yes—reduce position size by 50%, widen stop distances by 1.8x average weekend ATR, and disable entries during Asian session hours when BTC futures volume drops below 30% of 30-day median.

Q: How often must I update my plan’s parameters?Parameters tied to volatility or market structure—like ATR multipliers or support/resistance zones—must be recalculated before each trading session; static rules such as max drawdown limits remain unchanged unless equity changes exceed 25%.