Strategy Rules

Strategy rules are the foundation of disciplined trading. They define exactly what conditions must exist before trading, how to enter positions, and how to manage exits. By tracking which rules you follow on each trade, CandleLog helps you identify patterns between discipline and profitability.

Rule Types

Every strategy organizes rules into three categories:

Market Criteria

Conditions about the overall market environment that must be true before looking for trade setups.

Examples:

• VIX below 25 (low volatility environment)
• SPY trending above 20 EMA (bullish bias)
• Trading during NY session (9:30 AM - 4:00 PM ET)
• No major news events scheduled
• Price above daily VWAP

Entry Criteria

Specific triggers and conditions for entering a trade. These are your setup requirements.

Examples:

• RSI below 30 (oversold condition)
• Break of previous high with volume
• Fair Value Gap formed on 5-minute chart
• Price pulling back to 21 EMA
• Bullish engulfing candle at support

Exit Criteria

Rules for managing positions and closing trades. Include both profit-taking and loss-cutting rules.

Examples:

• Stop loss at swing low minus 2 ticks
• Take 50% profit at 1:1 risk-reward
• Trail stop below each higher low
• Exit if price closes below VWAP
• Time stop: close by end of session

Rule Properties

Each rule has several properties:

Name

A clear, concise title for the rule.

Good: "RSI Below 30" Bad: "Indicator condition"

Description

Detailed explanation of what the rule means and how to apply it.

Good: "RSI on the 5-minute chart must be below 30, indicating oversold conditions. Look for RSI divergence for higher probability setups."

Bad: "RSI must be low"

Required vs Optional

• Required - Rule must be followed for valid trade execution
• Optional - Nice to have but not mandatory

Required rules define your minimum criteria. Optional rules can improve trade quality but their absence doesn't invalidate a setup.

Outcome Type

Specifies when the rule applies based on trade result:

ALWAYS Rules

These apply regardless of outcome. Most rules should be ALWAYS:

• Entry trigger conditions
• Stop loss placement
• Position sizing
• Time-based requirements

WINNER Rules

Use for rules you want to verify on winning trades:

• Did I hold to my full target?
• Did I add to the winner appropriately?
• Did I trail my stop correctly?

LOSER Rules

Use for rules that help diagnose losses:

• Did I trade against the trend?
• Did I enter during news?
• Was my stop too tight?

BREAKEVEN Rules

Use for rules specific to scratch trades:

• Did I move to breakeven too early?
• Did I exit due to time stop?

Creating Rules

Add a New Rule

1. Open your strategy
2. Go to the Rules tab
3. Click "Add Rule" (or section-specific "Add Entry Rule", etc.)
4. Fill in the rule details:
   • Select rule type
   • Enter name and description
   • Choose required/optional
   • Select outcome type
5. Click "Create Rule"

Rule Form Fields

Organizing Rules

Rule Order

Rules display in the order they were created. Within each type section, rules appear in a logical sequence.

Sub-Rules

For complex conditions, create sub-rules under a parent rule:

1. Click the branch icon on an existing rule
2. Add the sub-rule details
3. Sub-rules indent below their parent

Example:

• Parent: "Bullish Entry Setup"
  • Sub-rule: "Price above VWAP"
  • Sub-rule: "RSI showing divergence"
  • Sub-rule: "Volume above average"

Tracking Rule Compliance

When assigning a trade to a strategy:

1. Open the trade detail page
2. Click "Assign Strategy"
3. Select the strategy
4. Check which rules you followed
5. Save the assignment

CandleLog calculates:

• Compliance Score - Percentage of applicable rules followed
• Rules Followed Rate - Average compliance across all trades

Analyzing Rule Effectiveness

Use rule compliance data to improve:

High Compliance + Winners

Rules followed on winning trades indicate what's working. Keep following these rules.

Low Compliance + Losers

Losses with poor rule compliance suggest discipline issues. Focus on following rules better.

High Compliance + Losers

Following rules but still losing may indicate:

• Rules need refinement
• Market conditions changed
• Position sizing issues

Patterns to Watch

Look for patterns in your compliance data:

• Which rules do you skip most often?
• Do skipped rules correlate with losses?
• Are optional rules improving win rate?

Best Practices

Be Specific

Vague rules can't be consistently applied.

Bad: "Wait for confirmation" Good: "Wait for candle to close above resistance with body >50% of candle"

Make Rules Binary

Rules should be yes/no, not subjective.

Bad: "Enter on good price action" Good: "Enter on bullish engulfing candle with lower wick >2x body"

Start Simple

Begin with fewer rules and add complexity as needed. Too many rules creates paralysis.

Review Regularly

Schedule weekly rule reviews:

• Are rules being followed?
• Which rules correlate with wins?
• Should any rules be modified?

Document Changes

When changing rules, add a strategy note explaining why. Track your strategy evolution.

Rule Examples by Strategy Type

Day Trading (ORB)

Market Criteria:

• Trade first 2 hours of session only
• Gap less than 1% preferred
• VIX below 25

Entry Criteria:

• Break of 15-minute opening range
• Volume on breakout candle above average
• Direction aligned with pre-market trend

Exit Criteria:

• Stop loss at opposite side of range
• Target 1 at 1:1 risk-reward
• Target 2 at 2:1 risk-reward

ICT Concepts

Market Criteria:

• Trading during kill zone hours
• Daily bias identified
• No high-impact news

Entry Criteria:

• Liquidity sweep completed
• Fair Value Gap formed
• Order Block confluence

Exit Criteria:

• Stop beyond FVG/OB
• TP1 at first liquidity pool
• Move stop to breakeven after TP1

Swing Trading

Market Criteria:

• Weekly trend identified
• Sector showing relative strength
• No earnings within 2 weeks

Entry Criteria:

• Price at demand zone
• Daily RSI oversold
• Bullish reversal candle

Exit Criteria:

• Stop below demand zone
• TP at supply zone
• Trail stop on weekly timeframe