First thing to look at is "What is your objective for trading futures?"

1.  Hedge against adverse price fluctuation.
2.  Diversify investment portfolio.
3.  Speculate in al attempt to earn additional income.

Depending on what objective you have chosen will determine the approach you will need to take.  Let's take a look at the hedge plan first.  The objective of a hedge-trading plan is to help you reduce or eliminate the risk of adverse price fluctuation.  This can be done through the trading of futures contracts, options on futures contracts or a combination of both.  Here are a few things to consider.

1.  How much capital will be allocated to use for margin requirements and options premiums?
2.  What percentage of known or estimated production are you going to hedge?
3.  Will you begin a consistent hedging program to help smooth out you P&L or is this just a one time situation?

Now you have to either obtain market information from the source of your choice or do your own analytical market research.  There are a number of services out there that are happy to tell you when to sell your production or buy your needs.  Sometimes a combination of your thoughts and analysis combined with a professional service can work well to fill your marketing needs.  Tracking the market on a consistent basis is the next step.  Keeping abreast of the market on a daily or weekly basis is a must to help you capture market share.  Once a price is realized that will satisfy your target it's time to act.

1.  Do you have a futures account open?
2.  Is it adequately capitalized?
3.  Have you gone over with your broker your goals and intentions prior to placing your order?

If you placed the maximum hedge against your production at one time, then it's a pretty much a wait and see game.  If you are scaling into a hedge then you will need to continue to monitor the market closely.  During the length of time that the hedge is placed, keep abreast of any change of fundamental conditions.  Has your source of information changed its outlook?  Market situations can and will change during the time frame you have your hedge on.  Adjustments from time to time may or may not benefit you additionally.

Time has passed and it's time to market your product and liquidate your hedge.  A continual record of these hedges will benefit you greatly in the years to come on what works and what doesn't.  you now have a plan, let's put it to use.  Go to the Hedging Workshop and follow the instructions to help increase the odds of your success.

A portfolio diversification and speculative trading account share the same steps to build a trading plan.  Since there is no cash position, like in a hedge, to offset the futures position, this type of trading is most often based on a risk to reward ratio.  The first thought that comes to mind to ask "Is the money you are planning on allocating to a trading account expendable without changing your lifestyle?"  If not, you may want to consider another field of investment.  If so, then lets proceed.

1.  How much trading capital will be allocated to the account?
2.  How much of the allocated capital are you willing to lose before you discontinue trading?
3.  What percent of capital will you place at risk on a per trade basis?

These first three questions are critical in building your plan.  If you cannot answer these three questions, then may I suggest you rethink whether you really want to trade a commodities account?  If you answered the questions honestly then lets go on.

We'll assume that you have opened or know where you will open a trading account.  A few things to look at for in a broker and futures firm is, honesty of the broker, length of time in the business, commissions charged, general market knowledge, capitalization of the firm, and services provided.  Next, it's time to get down to business.  Trading is not a necessity.  It is a means of increasing or decreasing your investment capitalization.  It should never be treated as a game or something for fun.  It is serious business for serious people.  If you go in half cocked, you will most likely get your head knocked.

1.  Do you have a systematic approach for the entry and exiting of positions?
2.  Do you have a method for placing stops?
3.  Do you have the discipline to follow questions 1 & 2?

If you do not have these questions answered, then its back to the books for you.  There are numerous books, videos, and seminar tapes available on futures trading.  I suggest that you get several, read them all, and then determine which style of trading suits you the best.  This is a personal matter that only you can decide for yourself.  Do you want to call all the shots?  Bounce ideas off mentors?  Subscribe to an advisory service?  Trade a computerized or black box system?  The list goes on and on.  Through reading all of this you may well find that you are not suited for commodity trading.

Building a trading plan is not that difficult as you can well see.  But, the few questions that you answered will have a dramatic impact on the outcome of your trading results.  Knowing your parameters for money management, having the discipline to follow them and a reliable approach for position entry and is a must.  I hope that this has helped you to understand some of the basic criteria for building a trading plan.  If you need additional help in creating a customized trading plan, feel free to contact me anytime.