Trading Clarity: The Rebel’s Guide to Seeing Beyond the Noise

Published on: December 17, 2024

Clarity in trading—it’s the elusive holy grail for traders of every level. You know – cutting through the “noise”. Traditionally, “noise” has always referred to the seemingly random market moves that defy prediction. “Oh, I don’t watch a 1 min chart – that’s just noise” – OK – I get the concept. But here’s the kicker: just as much noise comes from inside our heads. It’s hard to watch a market without forming opinions on “what ‘they’ are trying to do” – in the moment, based on pure intuition. Yeah – we’ve done it – it turned out just as well for us as it did for you! True clarity demands distancing yourself from this chaotic thinking, and that distance comes through rules. But not all rules are created equal. There are mechanical (universally understood) and discretionary (universally misunderstood) decisions to be made – and today, we are going to help you hone your discretionary skills with guardrails to prevent you from falling for your chaotic thoughts – you can reserve those for the dance floor. 

Let’s clear up the noise. By starting with “What is “Noise”?

When traders talk about “noise,” they’re usually referring to the market’s erratic moves. Price action that seems to lack rhyme or reason. Normally referring to something they aren’t used to seeing “Oh, I use a 15-minute chart, anything below that is just noise”. Basically – it’s “unstudied activitiy”. AKA “The unknown”. I own equity in Virtu Financial – an HFT firm – and they seem to do just fine with that noise.

One man’s noise…

The other type of noise infecting traders is more nefarious – the little fellow on your shoulder, that internal chatter.  It’s those “evolving opinions” that change faster than an F1 race. “I think it’s going higher… no wait, that’s resistance… hang on, maybe it’s a trap.” This mental back-and-forth doesn’t just cloud judgment; it paralyzes action Or worse – it causes over-reactions. 

The solution? Rules. Rules are the guardrails that override the noise, giving us space to act decisively, which in turn educates the noise out of existence. t. But here’s where things get murky. Many think of rules as binary—you either trade mechanically, like a robot or you wing it with “discretion.” The truth lies in between. Both approaches, if done right, should reduce head noise. Yet discretionary trading has been twisted into something it’s not: a license for chaos. Let’s set the record straight.

The Allure of Mechanical Trading

The idea of mechanical trading is seductive. Fixed rules. No emotion. Just plug in the system and watch the profits roll in. And, to be fair, there’s a lot to like about it. Mechanical trading protects you from dumb decisions – moving stops, chasing the market, revenge trading. It promises simplicity in a complex world.

But there’s a catch: markets aren’t simple. They’re dynamic, driven by factors a static system can’t always account for. The truth is, most mechanical traders fail. Not because their systems are bad, but because they’re incomplete. Even the best system needs a human touch—to decide when to turn it on or off, to adapt to changing conditions. In a firm running mechanical systems, they will turn them off if: 

1. Market Conditions Unfit for Strategy Execution – because some strategies work better in high volatility and some in low (for example).
2. Scheduled Economic Events or Announcements – because the volatility caused can disrupt the logic of the system.
3. Significant Overnight Market Gaps – which might disrupt assumptions about opening levels and momentum, may wait for stable conditions.
4. Major Geopolitical or News Events – which introduce chaos the system isn’t designed to handle.
5. Detection of Unusual Market Activity – could mean a pause to avoid unnecessary risk.
6. Transition to a New Market Regime – trending vs ranging requires different approaches.
7. System Performance Metrics Deviation – drawdowns, win rates, and Sharpe ratios. Significant deviations from expected performance can lead to a temporary halt.
8. Regulatory Changes or Exchange Announcements – margin requirements, circuit breaker triggers, or new regulations can render the system’s assumptions invalid.
9. Need for Strategy Recalibration – over time, market dynamics evolve, requiring periodic recalibration of parameters.
10. Technical or Data Infrastructure Issues – yeah, shit happens.

Now – I do apologize to those who thought they’d just code up a moving average crossover and trade it like a robot – a lot of the above sounds awfully discretionary, doesn’t it? The fact is – you cannot avoid making discretionary decisions in trading – even if it’s just the decision to turn on your trading robot today!

This is where discretionary trading comes in. But it’s not the “gut-feel gambling” many people appear to. True discretionary trading leans on how we learn as humans, blending intuition with structure. Think of it as using your subconscious mind’s incredible processing power—but within the confines of clearly defined rules.

Here’s what discretionary trading rules might look like:

• Is the market getting faster? Recognizing acceleration in order flow.
• Is there overwhelming order flow against me? A clear sign to reassess.
• Is the market slowing down? A potential reversal signal.
• Should I take this Oil short, with that Oil refinery fire in Saudi? A sign to maybe sit by the sidelines and wait.
• Should I use a wider stop/smaller size to take into account of this additional volatility?
• I’ll take a pullback if the trend looks strong and the pullback looks weak.

These aren’t guesses – they’re merely the interpretation of “indicators” that guide decision-making. When applied consistently, they quiet the mental noise while letting you adapt to the market’s rhythm. 

From Instinct to Insight: The Power of Structured Discretion

Discretionary trading often gets a bad rap as “just guessing.” But true discretion is far from random. It’s structured decision-making, built on repetition and refined through experience. Think of it as intuition with guardrails. Consider this: the best discretionary traders don’t “shoot from the hip.” They’re answering questions like:

• Is this move supported by order flow?
• How does today’s market behavior compare to previous sessions?
• What’s the likelihood of this setup failing under current conditions?
• How strong is this news?
• How did the market react to this event previously?

One of the goals of the Jigsaw Trading Manifesto is to help people understand the gap between rigid systems and reckless instincts, offering a roadmap for structured discretion. It’s about harnessing your subconscious’s pattern recognition skills and pairing them with actionable rules.

It’s about treating trading like every other skill you acquire. Yet trading has been put on a 1000 foot pedestal that nobody thinks they’ll ever reach. People attempt to learn trading in a very peculiar way. Hence the topic of one chapter “You can’t learn to swim from a book”. There IS a way to learn how to trade – and almost universally – nobody likes it. Just like learning to swim – I recall sinking a lot, breathing in water through my nose, not being able to swim just 25 meters – I hated it. Love swimming now though!

The Feedback Loop: How Rebels Learn to See Clearly

Strange thing. The rebels in trading are the ones taking the lesser-traveled path of due diligence and focused hard work.  Not LONG HOURS – everyone does that – just most people are playing “Trading Space Invaders” to fill those hours. The upside of the “Space Invaders” approach is that it’s fun. You go in – click buy and sell each day, and do the same again the next. What you don’t do is improve. Improvement itself is a process and like any process, there are good ways and bad ways to approach it.  Clarity doesn’t come overnight, in fact – it doesn’t come at all without you ‘setting the scene’ for learning. It’s a ‘benefit’ developed through consistent practice and reflection. In fact, The Trading Manifesto emphasizes the importance of a feedback loop—a process of review and iteration that sharpens your edge. It’s the loop that causes the information to hang around in your head long-term. Here’s how it works (feel free to verify with a bricks ‘n mortar prop firm):

• Post-Trade Analysis: Reviewing what worked, what didn’t, and why. Tools like Journalytix automate this, making it easier to identify patterns. You sill gotta look though!
• Feedback-Driven Improvements: Small tweaks based on data, not emotion.
• Subconscious Training: With each review, your mind learns to recognize what’s worth acting on and what’s just noise. 

Most traders skip this key part of trader development. They’d rather chase the next trade than reflect on the last. But this reflection is where clarity is forged.

Embracing the Rider’s Spirit: Trading on Your Terms

The independent trader doesn’t follow someone else’s map – they carve their own path. At first, this sounds scary. This sounds a lot like “Here’s a chart – now go away and figure it out on your own”.

It’s not that at all. Of course, you can learn from others. You come to trading as a unique human being with your own unique set of flaws and glitches – which trading will kindly find for you if you didn’t know about them before. You will learn and you will apply what you learned. You’ll likely trade a market that suits you personally, some techniques will resonate and some will make no sense. Some things you’ll be able to “read” and some you won’t’

Trading clarity isn’t about rigid adherence to someone else’s rules. It’s about understanding the market deeply enough to adapt when needed.

The manifesto embodies this philosophy. It’s not a “paint-by-numbers” guide. It’s a framework that gives you structure while leaving room for nuance. It keeps you grounded, but it doesn’t clip your wings.

Successful traders embrace this spirit. They reject cookie-cutter systems and instead build their own, drawing from experience, review, and structured discretion. They don’t just see the market—they understand it.

The manifesto is more than a guide—it’s a call to arms. A challenge to see beyond the noise, to embrace clarity, and to trade with purpose. Like the rebel on an open road, you have the tools to navigate any terrain.

The question is, are you ready to use them? 

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Order Flow itself is simply information. Just like charts, it can be used in a number of ways, some good and some bad. But let's first break down order flow into it's components so we all agree what we are talking about:

Order Executions/Tape Reading - This aspect is the real flow of orders. It's the information we see in Time & Sales, Footprint Charts, Cumulative Delta. It is looking at market orders, either as they execute or historically. I guess this is the "true order flow". Every trade is a buy and a sell. We look at market orders because we consider them to be more aggressive. When someone trades with a market orders, they are giving up a price to get an instant fill. Limit orders on the other hand just lazily sit there waiting for a market order to hit them. Often these are market makers with no directional conviction. So we see market orders as being more significant.

But we don't use these in isolation.

Volume Profile/Positions - The tape reading part helps us assess various things like momentum, traders getting stuck, balance of trade BUT the volume profile helps us understand where people are positioned and likely to get stopped out. I sometimes call this "Order Flew". It's important to know when trades will be "washed out" - for example - if we have a volume cluster on the S&P500 Futures and the market moves up 100 points and back down to it, it's unlikely short term traders on either side that were positioned there will still be there. But recent, nearby volume helps us assess areas of positions.

Market Depth - The bids and offers, the lazy passive orders waiting to be hit. This is part of the story but in terms of overall importance, I'd put it at around 20% at most. For example - if you return to the high of the day on any market, the offers will be quite large directly above the high. It means nothing at all. It's just a quirk of the market. It does not help you tell if a price will hold. On the other hand, if you see large depth and as we approach it, we see more added to the depth in front of that price, it means others are front running that depth and that is a useful bit of information.

This is the key - it is all just information. Just like price charts are information. When people look at Order Flow, they consider it to be a technique more than a set of information. They look for things like iceberg orders and decide to make a one rule trading system to fade every iceberg, For these people - yes, order flow trading is overrated because they are trying to ignore everything else going on in the markets and construct a trading system a chimp could execute.

For those looking to improve a decent trading approach, the best thing to focus on in Order Flow is momentum. Once you can read momentum you can:

• Avoid getting into positions when momentum is against you.
• Confirm trades are working after entry when momentum goes your way.
• Exit trades in profit when momentum fades.

That's perhaps the easiest way to use order flow because momentum is easier to read. It's about the market continuing to do what it's already doing. On the other hand, reading a turn in the market with order flow takes a higher level of skill and a little longer to learn.

Order flow can't put lipstick on a pig. It won't help you 'improve' something that doesn't work anyway, which is why whenever someone calls me, the first thing I ask is what they are currently doing and we discuss whether they need a reset or whether it will actually help.

When Jigsaw started back in 2011 - we were one of the first in the space and certainly had the best education. It was always going to attract the underbelly of the trading education/tools world and now we see stuff out there that is so complex but so impressive and futuristic that new traders are drawn to it like moths to a flame.

So here's my advice when looking at Order Flow

• Order Flow can't improve something that doesn't work.
• Order Flow can be used on it's own, without charts to enter and exit the market but you also have to be able to recognize different market states that need different/altered setups. There is nothing magical about this.
• Don't start jumping at shadows and take 50 trades an hour in your first week looking at Order Flow, be selective. It can be exciting to see cause and effect play out in front of you for the first time but don't overtrade.
• Do drills to learn how to read it before you trade it.
• Markets can only go up and down. Don't overcomplicate it. If you have too many Order Flow tools on your screen - you will not be able to make consistent decisions. Less is more.
• Take time to choose a market with a pace you like. Interest rates might send you to sleep, the DAX might give you a heart attack.

It is hard to see how a set of information could be overrated. It is true that some methods of presenting this information are better than others. It is also true that some people simply get on better with different tools (e.g. Footprint vs DOM).

There's a middle ground between complexity and simplicity that will leave you making consistent decisions where you improve over time. For those people, Order Flow will be way underrated because they will be the one's getting the most out of it.

Those that jump in with both feet on day one and those that have 100 different tools up, for those, it's a painful experience.

Keep it simple and manageable. Start with momentum reading and build from there. You will never look back.