Avoiding Overtrading Traps

To master trading, you have to master yourself. There is no strategy or system that is superior to another if you don’t know how to stay regulated and in control. You have to remain grounded so that you make correct decisions and use discernment from your intuition. Trading well is so little about what indicators or instruments you use…it is about having enough control of yourself and emotions so that you can execute your plan correctly. Every. Single. Time.

You already know that overtrading is my nemesis. When I am losing my footing, I kill my profits with too many trades that may have proper setups, but faulty management and exits, or the opposite: I take something on that I justify against a correct setup. Anytime I have a lot of chatter, FOMO, or a rush of excitement or anxiety, I know I am in trouble.

My usual overtrading is when I have had a great run, and then add too many positions or too much size after the initial move starts to slow down and digest. This past week I engaged in one of the ugliest forms of overtrading and that is: flip flopping in my directional conviction and trading a call one day then a put, then closing calls early from fear, then jumping back in, then adding puts…a hot hot mess.

It has been a while since I’ve done this, and I hateeee when I do it because, it’s not just about putting on extra positions instead of waiting, but it is completely disorienting. For example, instead of waiting for an A+ call setup, I try to catch a decline in a rising market. And even though I told myself, we’re in a rising market this will be a short (duration) short (put), it took my focus away on the setups I have been waiting for. And even worse: the context shift made me fearful of a greater pullback for the call positions I entered the prior week. So instead of honoring my stops and staying in when my stops weren’t hit, I got out. There is a huge opportunity cost when you take a lesser setup.

Most of what I write about isn’t new. And as active traders, we know these are things we battle over years, weeks, and sometimes, especially during periods of emotional volatility, on a daily basis. It’s wild how we can know what keeps us on track, and still skip the workout, eat the fried food, or open Netflix before getting our chart work in.

I broke down what went wrong so I can course correct more quickly, and hopefully one day, not fall into this faulty loop at all.

1. How I got off track
   I went off the rails because I was distracted and not grounded. I was distracted from my goals because I was spending less intentional time with myself before trading or before my day got started. It is not about how long this time is, but about getting in alignment before the trade. This intentional morning or pre-trade time is so critical. It’s where I remember why I’m doing this, review my plan, review the overall market. It’s where I sit with God, revisit my specific trading goals, and reconnect with the truth that everything I want is already in motion. This time anchors me and allows me to operate from abundance versus scarcity. It reminds me that peace is built before the market opens. It’s the underlying work, the non-negotiable work that no one sees.

2. How I snapped out of it
   I stepped away and zoomed out. I went to my weekly charts, reminded myself that my trading stocks are still in an uptrend, and stopped trying to short. Unless we have a shift like we did in February, there is no reason for me to try to pick up little trades and miss out on the ones that are easy to do because they are in alignment with the greater trend.

3. How I emotionally recovered

   Gratitude. There is no greater way to reset yourself than reminding yourself of how much you have already accomplished. This is so important for your confidence and ability to bounce back. I remember taking a live trading class where the teacher would ask all the newbies to raise their hands or stand up. Then he’d ask the rest of us if we wanted to be where they are at. And a huge no and shaking of heads would erupt. I think about this experience all the time, because no matter how much things suck in the moment, honoring how far I’ve come always reframes my current situation. Then in the energy of gratitude, I can get back on track and get back to manifesting my next dream.

Trading isn’t for the lukewarm. It’s not for the faint of heart. It requires full presence, full responsibility, and a full-on commitment to mastering yourself, your craft, and your convictions one trade at a time.

And with this zoomed out, reset kind of energy, let’s take a step back and look at what SPX is doing, plus! a new stock of the month: RDDT

Market Outlook

This week, I am went minimal with my lines and zoomed out. I asked: what is the structure of the trend, where are we at in the cycle?

1. Still above key weekly MAs, trend remains intact
   The weekly chart still shows an uptrend. We're above the 10EMA, 20EMA, and 50SMA, and those moving averages are turning up. So while the pace of the uptrend has slowed, the broader structure hasn't broken down. This past week was a digestion of the recent April and early May run, and so far, not an unraveling of it.
   

2. Friday's dip was likely just a shakeout.
   Friday gave us a candle that flushed below the daily 20EMA then quickly reversed. That kind of action often traps early shorts and clears out weaker long hands…a classic shakeout. If this theory holds, we should see strength early next week. But if we break below the 5750-5725 area, that thesis gets invalidated. At that point, I'd treat the move as something more structurally weak, not just a pullback.
   

3. Confluence zone still holding for now
   We're sitting right on a layered area of support above all moving averages, and a horizontal support and resistance level from earlier this year. So far, it has held. If it continues to hold, it gives the index a platform to try the upside again.
   

4. Trendlines matter, but not more than the overall structure
   I was asked about trendlines this week, and it was a good reminder to step back and recognize how I was sharing my use of them. Trendlines are helpful, but they’re just one part of the picture. Same goes for moving averages, volume, and other tools. They only hold weight relative to the context. In a choppy, indecisive market, over-focusing on any single signal can do more harm than good. I'm aiming to keep my analysis well-rounded, zoomed out, and centered on structure.
   

5. What would confirm the upside?
   A clean move back above 6,000 and a push through the February all-time high would help strengthen the case for continued upside. Not just because it’s a technical level, but because it’s psychological too. If we’re breaking out into new highs, especially after the chop and hesitation of the last few weeks, that’s when retail traders tend to feel like we’re “in the clear.” That can bring in more participation, more confidence, and more momentum. Ideally, we’d see a higher low hold on any dips, and then a strong push through 6,000 with follow-through, not just a quick tag and pullback. That kind of behavior would tell me buyers are stepping in with conviction again.
   

6. What would shift the bias more bearish?
   A breakdown and hold below 5725 (not just a quick flush) would suggest deeper downside potential. From there, 5600 (around the daily 50SMA) becomes the next level I’d watch for support. But so far, I’m not leaning toward this as the main scenario.

RDDT for the month of June!

Reddit has been on my radar for a while because of the way it’s been basing. I had a position in it a few weeks ago and then the reverse from 130 crushed the profits I didn’t take off the table.

Friday’s breakout above the short-term range, along with the move back above key moving averages, caught my attention again. It’s still early in the move, so I’m not rushing in heavy, but I’ll be watching for either continuation or a setup that gives another entry.

1. Early signs of momentum shift after long base
   Reddit has been basing for months after its steep February decline, holding higher lows on the weekly and starting to show signs of accumulation. This week, we saw a move above the daily 10EMA, 20EMA, and 50SMA, reclaiming some important short-term structure. Friday’s push above $105 was the first clear sign of momentum, especially since it also reclaimed prior support/resistance in that zone. It’s early, but constructive.

2. Trendlines softening, downtrend getting tested
   The longer downtrend that began off the February high is still intact, but the slope is flattening. That alone doesn’t confirm a reversal, but it often signals a shift in sentiment. You can see the resistance trendline starting to compress toward price, creating a tighter wedge and potentially setting up for a move out of this range.

3. What would confirm continuation?
   If price continues holding above the moving averages and takes out the most recent swing high around $120–122, it opens the door for a move into the $125 zone. That level acted as resistance during multiple bounce attempts and could be a natural area to pause or consolidate again.

4. What would change the picture?
   A move back below the 10EMA or the $105 zone would make me question whether this breakout is sticking.

If you didn’t catch Friday’s move and the momentum continues, you will likely be able to find an opportunity to get in on a retest or consolidation on a smaller chart time frame. As long as your trade chart supports it, and if this is in fact a breakout from the base, there will be a few opportunities.

I am hoping for a swing up coming into this week, especially having seen a few entries on Friday. If we breakdown, I will just sit out, at least initially, as it could just be summer chop.

How is your trading going? What are some of your wins? I’d love to hear from you. I read every email, so feel free to reply back to me.