Hey Trader,
On Tuesday morning, Dave had his Golden Setup done before the market even opened.
He caught a long at 7:29 a.m. Eastern for 25 handles!
The next 23 minutes…turned into a textbook case of overtrading after a win.
His log showed more entries at 7:32, 7:48 and 7:52.
By the time he emailed me, he’d given back 100 handles over two days. He was trading micros, which kept the damage to about $200.
I pulled his trades up in the Golden Setup room and read the timestamps out loud. My reaction came right away.
“You’re just trying too hard.”
Dave wasn’t doing anything I haven’t done. I can’t tell you how many times I’ve caught myself overtrading after a win, including that same morning in the futures room.
There’s a little switch in your brain that flips after a loss. Mine says the same thing every time.
“Gotta get it back, gotta get it back, gotta fix it.”
That voice turns a green morning red faster than any setup ever will.
I’ll walk you through Dave’s log the way I walked the room through it. You’ll see the trade that went off the reservation and the $600 bullet analogy I use to stop overtrading after a win.
I’ll also share a rule an old pit buddy taught me about when to press and when to back off. Then I’ll give you one question to ask yourself the moment your first winner closes.
How Overtrading After a Win Starts
Quick orientation first.
My levels repeat inside every 100-point block on the NQ, so a 26 sits 26 points above a round number I call the roundy, with the 12 below it and the 50 above.
A Golden Setup long buys the 26 when price pulls back to it from the 50. Dave’s first trade was exactly that setup, and he booked 25 handles.
His second trade was another long. It went against him and stopped him out for a minus 6.
I can live with that. One winner and one small loser still leaves you up 19.
The third trade worried me.
Dave bought the 26 after price climbed up from the 12, which isn’t a setup we trade.
“You’re off the reservation, dude. You were trying to get this back. This wasn’t your setup, man.”
That trade cost him 15 handles. A few minutes later, he bought again.
None of those losses came from bad levels. Dave had slipped into overtrading after a win and stopped waiting for his setups.
I told the room what that shift looks like from the outside.
“This is where your mindset goes from relaxed trader to, I want to get it back.”
The $600 Bullet
Dave trades micros, so his 25-handle win was worth about $50. I asked him to picture the same trade on the full NQ contract, where 25 handles pays $500.
Then I asked whether he’d have taken any of the trades that came after it. His log already told me the answer.
“So we’re not using micros the way we should.”
On the full NQ, a stopped-out Golden Setup costs about $600. I asked the room to think of every trade as a bullet worth that much.
“You’re gonna treat them like they’re gold.”
A hunter takes the shot when the target crosses his path. He doesn’t start firing into the bushes after he misses.
“These bullets are expensive. So just let’s not go like the timeline rapid fire.”
Four entries in 23 minutes is rapid fire. It’s also overtrading after a win in its purest form.
When It’s Easy, Be Aggressive
An old pit buddy of mine boiled this whole problem down to one rule.
“When it’s easy, be aggressive. When it’s hard, back off.”
The rule sounds simple. Recognizing which kind of morning you’re in takes practice.
Tuesday’s NQ ran more than 400 handles off its lows. The long was the easy trade.
“This morning we had the long, it was easy. I made it hard by trying to find where this thing was going to reverse.”
I’d already banked that long on three contracts. Then I took three shorts against a straight-up move.
Each one stopped me out for minus 20. That’s how I ended up overtrading after a win of my own, and after the third short, I stepped away.
I trade live in a fishbowl. I’m not going to pretend that morning didn’t happen.
“I feel compelled to post up winning trades, but I own my losers too.”
When the tape is easy, I press it. When it fights me three times in a row, I take the hint.
The Question That Stops Overtrading After a Win
I asked Dave one question on Tuesday. I want you to keep it next to your screen.
When your first winner closes, price it on the full NQ contract. Then ask yourself whether you’d take the next trade with $500 already booked.
If the honest answer is no, you wait. I told Dave exactly what his morning should have sounded like.
“I got my golden setup. I got my 25 handles for the day. That’s my 500 bucks for the day. I’m done.”
Ask that question before every entry that follows a winner. You’ll catch overtrading after a win before it does any damage.
Your timestamps also show overtrading after a win in black and white. Several entries inside a few minutes mean you’ve started trading every little move instead of your setups.
Two straight losses are your cue to stand up.
“Let me get up out of my desk. Let me walk into the other room.”
If overtrading after a win has already put you in a drawdown, measure it in trades instead of dollars. Dave’s 100 handles sounded like a hole, but with 25-handle winners, it’s four trades.
“Take them one trade at a time.”
The setups don’t go anywhere.
“There’ll always be setups, man. Always.”
Ninety Days In
Dave has been trading futures for about 90 days. He’s already reading his own log and spotting his own overtrading after a win.
Plenty of traders struggle for years before they can talk about a drawdown that calmly.
“If we can learn to control ourselves, we have the keys to the kingdom.”
Next week brings earnings from Microsoft, Google and Amazon. Those reports could move the tape fast, and a fast tape makes rapid fire feel productive.
When you catch yourself overtrading after a win, say it out loud. “Whoa, I’m trying too hard.”
Dave’s best trade on Tuesday was his first one, at 7:29 a.m. Everything after it was an attempt to improve a day that was already done.
The levels, the brackets and the live room where I walked Dave through his log are all inside my Golden Setup.
Trade smart,
Tony Rago
Creator of the Golden Setup
