Zak Westphal's guide to building a bulletproof trading plan

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Trading has opened up to mainstream investors in recent years. Apps make it enticingly easy to grab shares with just a few taps. But many soon learn that long-term profitability takes more than sporadic lucky stock picks. It requires navigating unpredictable markets daily with a disciplined plan guiding your every move.

According to veteran trader Zak Westphal, CEO of StocksToTrade, lack of planning causes new traders to spin wheels emotionally chasing random hot tips. Maybe they’ll grab gains once in a while. However, achieving reliable consistency remains a pipe dream without a defined trading strategy.

After years of helming StocksToTrade and witnessing countless trader journeys firsthand, Westphal insists having a solid trading plan is 100% mandatory before diving in. In this press release, he shares the battle-tested wisdom of planning that separates the thriving traders from the floundering. Westphal breaks down key components so you can craft your roadmap designed to yield sustaining returns no matter how rocky the waters get.

Many new traders underestimate the power of diligently planning their market moves. Sure, they might have broad ideas about the kinds of returns they want to make. However, without clearly defined guidelines for steering every trade, emotions and impulses will eventually derail even short-term success once volatility strikes.

A solid trading plan acts like a roadmap through the unpredictable market terrain. It keeps your trades aligned with your destination – long-term profitability – regardless of the buying or selling sheer cliffs you encounter along the way. Without that map guiding your next move, success becomes pure luck rather than the rewards of discipline. As Westphal puts it from years of trading experience: "Barreling ahead trade after trade without a plan is like embarking on a cross-country road trip without any map or GPS. You might cruise along just fine for a while. But you’re guaranteed to get lost out there – sometimes disastrously so."

Before plotting a single trade, clearly define the destination you want to reach. Get ultra-clear on your trading goals – the financial objectives fuelling each buy and sell decision. Westphal explains: "You have to set your targets before firing off trades all willy-nilly, or you’ll just waste time and money spinning your wheels."

Start by asking yourself:

• What is my ultimate purpose here? Supplemental income? Retirement funding? Or to replace a full-time salary?
• How much capital am I willing to actively risk trading?
• What's my timeframe for achieving these trading goals? The next year? Five years? Ten years?

Document this. It provides essential context for shaping strategies and measuring progress as you navigate the unpredictable market roads ahead.

Many different trading styles exist, from rapid-fire day trading to long-term investing. Choosing one that aligns with your risk appetite, available time and personality strengths is crucial.

As Westphal puts it: "There's no universal roadmap for every trader. What works for that high-risk day trader constantly watching ticks may end in disaster for the busy professional dipping into swing trades when they can. Map out routes that match your lifestyle."

Adopting a day trading style likely means trouble if your schedule won't accommodate constantly monitoring shifts throughout the day. Be honest with yourself. Given your unique lifestyle constraints, commit to a style you can realistically follow. Document guidelines for the market conditions, timeframes and indicators you’ll trade around to align your trades with that approach.

At this point, it's time to transform your trading plan from abstract ideas into concrete rules for execution. You need to lay out the specific conditions that must be met for you to both enter and exit positions.

Having predefined criteria eliminates guesswork and knee-jerk reactions. Instead of trading on emotions in the heat of the moment, your rules act like steadfast signals – green means "go" and red means "stop". There is no second-guessing, and there are no exceptions.

Westphal explains: "This is where the rubber meets the road with your trading plan. Spelling objective entry and exit criteria will make or break your consistency."

For example, you might create a rule only to enter a new trade when a stock breaks above its 50-day moving average – a positive momentum signal. You might plot an exit co-ordinate when the price reaches a predetermined profit target or falls below a key support level.

The key is: every trade needs to have these rules and criteria predefined so your decisions become about strategy rather than impulse. With your co-ordinates mapped out, you can navigate the winding roads of volatility with assurance instead of anxiety. Your plan keeps you headed towards the ultimate destination – long-standing returns.

The most perfectly plotted trade route means nothing if you don't build strategic stops and guardrails. Risk management keeps you from careening off cliffs when volatility strikes.

As Westphal shares: "You can develop the greatest step-by-step trading strategy. But without risk guards in place, a single impulsive trade can still blow up your entire account. Always outline the maximum loss you will accept going into a trade. And never, ever deviate from that threshold."

Techniques like position sizing and stop losses act like pre-placed seatbelts, securing you against sudden market swerves. Position sizing determines how much capital you strategically allot to each trade based on projected risk and reward. Stop losses automatically trigger predefined sell points to exit positions before incurring more significant damages.

With these measures mapped into your plan, you maintain control even when the terrain turns treacherous. No matter what the markets throw at you, your guardrails keep loss limited and your trading account protected.

A trading plan isn't a static document. The markets move in dynamic ways, so our plans must adapt accordingly. That's why regularly reviewing and refining your roadmap is critical. And keeping a detailed trading journal accelerates that process tremendously.

According to Westphal: "A trading plan isn't something you set and forget. You need to track each trade closely, analyse what's working versus faltering, and make adjustments so it aligns better with evolving conditions. Your journal is indispensable for that."

Recording details like your entry/exit rationale, price points, technical indicators at the time and ultimate profit or loss enables you to detect patterns faster. You can quickly identify weaknesses that allow losses to accrue and double down on profitable strategies. Over time, fine-tuning based on those journal insights helps you upgrade to a trading superhighway capable of blazing returns in any market terrain.

Creating a sturdy trading plan provides the structure and discipline essential for navigating the winding roads of the financial markets. With clear guidelines steering your moves, you transform from an impulsive explorer to an expert navigator of whatever terrain emerges.

Following Westphal’s battle-tested advice for constructing your unique roadmap, you can charter your steady course straight towards long-standing returns. Keep that plan by your side, revising as needed. Let it guide your next trade and the next. Over time, the compound effect will lead you to your ultimate destination – consistent profitability.