The Week Starts Out In The "Noise State." Does It Continue? April 16 Gameplan

If You Can Trade Monday and Tuesday's Price Action, You're Better Than Most Traders

Markets are in either one of two states: Flow State or Noise State.

What’s this mean?

Noise State: Most of the time, ES is stuck in what I call the Noise State. This is the default mode of the market—price chops, traps, fakes, and resets. It doesn’t trend cleanly. It oscillates. One moment we’re bouncing off a low, then we’re running two levels higher, then we stall, fade, rally again—and by the close, we’re right back where we started. Maybe. That’s the game in the Noise State. It’s a market in negotiation—no clear winner, just back-and-forth indecision. We don’t get to pick the size of the range. We don’t get clarity. We get movement that feels like momentum but rarely follows through. This is the norm.

Flow State: Every now and then, ES shifts into a Flow State. This is the exception, not the rule. A trending day where price respects structure—first level support holds, second level builds momentum, and ES starts lifting toward high time frame supply. The tape smooths out. You can feel it. This is when price flows. When participation is one-sided and clean. These are the days traders fantasize about—but they’re rare. Unicorns. Respect them when they show up, but don’t chase them every day. You’ll burn yourself out trying to force flow in a noisy market.

Most of the time, the market lives in the Noise State.

If you can trade that, you can trade.

This is exactly why our profit-taking system works:
ES rarely moves in a straight line. It fakes out, whipsaws, flushes, rips, stalls—then reverses.

It takes the long way home.
And if you don’t know when to take profits, the market will decide for you.

This is exactly what happened Sunday/Monday Apr 14 and Tuesday Apr 15. We didn’t get clarity.

Monday Noise Explained:

I really should be writing the below in one paragraph/day. It’ would look like one indistinct, convoluted paragraph — you’d have to take a deep breathe afterwards absorbing all the turning points and price oscillations…it’s exhausting… I guess that’s the point I’m trying to make :). For reading purposes I’ll bullet point it (still may be exhausting).

Here’s Monday’s Chart:

• We opened Sunday with a small gap up at 5452, rallied to 5474

• Then sold off 5410 in the first hour of trading. By 7PM EST Sunday, April 13th, we bottomed but we failed to close the gap at 5399.

• An impressive bull stair-stepping rally is what we got, with the green impulses growing in size and strength — from 5409.75 - 5497.75 right up til the 9:30AM EST bell hit.

• Within 15 minutes we sold off 52 points to 5444.

• Right as bears thought they had momentum, price bottomed and bounced 48 points to 5492

• Bulls thought it was there day as we ran up to the 9:15 highs and retail bought. This left them empty and we sold straight down to 5391 and filled/overshot the gap.

• At 5391, bears thought that they were in business, but it was a failed breakdown (one of our core setups). Traders who know how to trade waited for 5400 reclaim, bought (like we did) and saw price intraday trend to 5479.25

• Then we sold off in the final hour of trading back to 5405.

Tuesday Noise Explained:

Here’s Tuesday’s Chart:

• 5405 Was the low held overnight as we bounced to 5442 and remained in range 5424.25 was the low middle of the night.

• Bulls popped out of range to 5463 at the London open (3AM EST)

• Then, we sold off to 5413 by 8:15AM EST

• 5428 was the reclaim trade of the day (the only one we took), and price rallied to 5485.

• 10AM EST marked the high, and we sold off the majority of the day to 5419.50

• Then we popped 25 points back up to 5444.75 from 2:15PM - 3:15PM

• And in the last hour of trading, we sold off to 5420.75

This is why I say:

If you can trade that, you can trade.

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I wrote this on X yesterday:

“There is massive value in knowing when to trade and when NOT to trade”

The majority of the time we do very little trading. We do a lot of chart reading. We spend the majority of our day reading price, finding critical areas and and looking for opportunities.

We “click” the button, very few times.

When the market is in a state of noise, it’s absolutely paramount to your success to understand this.

If I could put more emphasis on this idea, I would.

There’s very little we control when it comes to being a trader. We don’t “know” anything. We can’t predict the future. We’re unsure of what levels will be respected, how many levels will be blown, and we don’t know if/when we’re going to enter the flow state. So we don’t try to be heros. We don’t chase homeruns. We don’t think just because we’re in the trade that the trading Gods favor us and price will rally indefinitely.

We have rules. We have a plan. We are disciplined in our entries AND our profit taking. And we know we may miss out on homeruns. I’d rather constantly profit then make 50 points, then see my paper profits vanish because I didn’t know how to take make when it’s due.

Core Belief: The Market Operates In A Noise State

With this in mind, I find it appropriate to borrow some content from the core strategy. I’m revisiting the Risk Management and Profit Taking section:

I like simple.

So I group risk management and profit taking into one. They are part of the same theme here at ES and I find it difficult to differentiate the two when it comes to trading the core strategy.

While what I’m about to share with you is simple…. it’s incredible important.

These rules are absolutely, positively, under no circumstance whatsoever, to be violated. Ever.

These rules keep me profitable.
They protect me from emotion.
They ensure I have a position in most trend legs.

#1 No more than 5% risked on any single position. Non negotiable.

If you have a wider zone or stop…. make the contract size smaller. Smaller zone? You can add some size. But always give ES enough room to stabilize before you a proven wrong. The worst feeling in the world is getting wicked out only to see price go your way.

#2 Nothing less than a 1/1 reward to risk for T1. Non negotiable

This means if my risk is 10 points, I cannot take the trade unless my first target is 10 points. The levels decide whether I am able to accomplish this or not. Not my feelings. Which leads me to…

#3 I do not get to decide where Targets are. It’s just shy of next level resistance

This means, I never set an arbitrary target. I must use my support and resistance, critical areas and key supply and demand levels to identify and set targets. I usually set them just a few ticks below the level.

#4 60-75% of contracts are to be taken at T1

The majority of my position is sold once I hit the first target. This ensures I maintain a winning trade percentage and stay green. If I abide my rule #2, in theory I can be a 50/50 trader and still make money.

#5 10-15% of contracts are to be taken at T2

Again, abiding by rule #2 and now rule #4….Once I’ve sold the majority of the contracts at T1, my job to maintain and continue the profitability of the trade. I do so by taking a second target at a pre-determined support/resistance area which is simply the nest level up/down from the T1.

Our objective is to create….a runner.

#6 Always leave a runner if permitted

If T1 and T2 are hit, I move the stop to break even. That leaves me a minimum gain of the sum of profits in T1 and T2 and with a 10-30% position of the original position position to be left as a runner. I typically have a T3 if 30% is left and I’ll take 20% off at T3. But I always want to leave atleast a 10% runner.

#7 Limiting number of trades

Overtrading is the easiest way to blow your account.

So we have rules around that.

If you’re in a winning trade, there’s literally nothing to do.
So don’t.
Don’t go seeking more action.

If the market comes into a pre-fined trade opportunity, and you decide it’s a Grade A+ trade, risk down on Trade #2. Risk a portion of the gains from the initial win. The worst thing that can happen is to be up $10,000, think you’ve got the magic touch, oversize on the next trade, and end the day down.

The rules above provide consistency. In theory, you could be a little less than a 50/50 trader and still make money. Then, you’d just want to focus more on the entries and stops. That’s doable.

Our job is to make money, not predict the future.

Learning to take profits and risk appropriately is the absolute hardest thing to do in trading. It’s simple, not easy. Most traders struggle — are emotionally challenged in profit taking.

Why do you think my salutation at the end of every letter is:

“Trade like a Robot.”

We want to be mechanical, monotonous. Trading should be “boring”.

Too much action = too much risk
Too much risk = unnecessary loss

We get paid by being discipline, not by clicking more.

The only control we have is:

1. Trading predefined Grade A+ setups

2. Our Risk

That’s it.

The above Rules ensure we are green most days.

It ensures, after we find Grade A+ trading opportunities, that we take the majority of profits at T1 60-75%, take more at T2 (10-15%), and we allow ourselves to have additional targets and a runner.

Stick to these rules, understand ES normally is in the Noise State, and expect nothing once you’re in a trade. No anticipation, just reaction.

If you can conquer this idea you will find yourself a much better, more profitable trader.

Let’s dive into yesterday’s price action a bit more…

We took 1 Trade April 15.

The 5428 Reclaim, resulting in T1 and T2 being hit before being stopped out on our runner at breakeven.

In yesterday morning’s newsletter I wrote:

5428 looks like the first available failed breakdown potential but one could’ve used this yesterday from the Gap. We’re using that area again this AM as a support structure. We’ll look to see price if it approaches. A move to 21 and immediate bounce is what I’d be looking for.

As price sold off and we approached the 28 area, we flushed it, down to 13 and I wrote this on X:

As price started to “accept” the support below, I noted

Once acceptance was complete, we initiated the trade and we were filled at 5428.50. In a quick order (like we should if a reclaim is a true reclaim) we moved to T1 at 37 and I wrote this

Here’s a zoomed in picture of “acceptance.” One where we flush it, bounce back, respect it, maybe a final seek in liquidity, then move up.

ES initially found the low at 19.25 when we called for a low of 21. We typically need a few minutes of acceptance to occur, not a wick down and immediate move up. We got the immediate move and I chose to wait a few minutes as price developed. As ES does once in awhile, if needed additional liquidity down to 13. Which is why I wrote: “13 needs to hold.” I wrote that after the 13 low was in place and we were back in the 18-20 range, still accepting. Very rarely does price knife down, and turn and go. We need acceptance. This acceptance lasted 45 minutes. Took a long time, but we got it, nailing the only real good opportunity of the day.

As price moved up and hit out T2 at 5459, I had a 10% runner in place and my stop was at breakeven.

We continued to seek the top end of the range quickly at 5480. I announced I was moving my stop to 5435.

By 10:15AM I was out of the trade as price put in a low of 33, rallied back to 5472 and then sold off.

Was I upset my 35 runner was stopped by two points? Sure.
Was I surprised to see price runup, only to turn around and give it all back. Not at all

This is whats ES does the majority of the time. It’s noise. And when you know that, you’re comfortable taking 9 points on T1 and 31 points on T2. Runners are bonuses that workout if the noise trends up, or we get a flow day. Sometimes both happen and you get unlucky on a rare candle.

The noise stayed put.

I was happy with the outcome as I did my job, profited, and didn’t initiate a 2nd trade of the day because there were no Grade A+ setups. There was no overtrading.

I’d be happy as a clam if everyday were like yesterday.

That’s the power of rules, discipline, and profit taking.

Much less stress.

Having a plan —Waiting, preplanning Grade A+ setups, remaining systematic on entries, position sizing, and profit taking — Seeing it ALL come together — and being rewarded for the discipline… THAT’S why I love this.

Let’s get to today’s price action and opportunities