Rules to Apply to Your Trading

July 27th, 2022

There isn’t just one, best way to trade. Every trader has their own signature style and method, which means that each trading expert has their own set of rules they use. In their recent NinjaTrader Ecosystem event, Trading the Morning Gappers and Options Flow, Tiblio co-founders Kevin Hamilton and Leon Smith shared their own list of universal rules to apply to your trading.

First, before placing a trade, it is important to check the current state of the market. There are three main market conditions: uptrend, downtrend and a sideways channel. Hamilton said that it is important to evaluate that day’s market conditions before you place a trade. You don’t want to take a bearish position if the market conditions don’t warrant it, for example. Similarly, you want to be aware of the next earnings and dividend dates to ensure your trades make sense and are in alignment with that calendar.

From a market-mechanics perspective, you should evaluate recent highs and lows on volume before placing a trade. Then, you can calibrate the current price against those highs and lows to decide whether the time is right for entry into the market. If you decide a better time for entry is still coming, wait for it!

Not only should your entry timing be carefully chosen, but also your position size should as well. Hamilton explained that traders will sometimes take a huge position (going “all-in” or taking a “Hail Mary”) despite it not being appropriate for their portfolio. He advised against ever doing this, instead recommending that you scale into your position over time. For example, if you are looking to trade 100 shares, you could enter the trade 10 shares at a time. While you can never eliminate risk, this process can help you manage it as you go.

Finally, you should have an exit strategy in place before making a trade. What triggers are going to serve as your signal to close the position? Plan your exit out in detail before entering the market – and then stick to your plan!

In this short clip, Hamilton explains his trading rules in greater detail:

If you want to learn more about Kevin Hamilton and Leon Smith’s trading system, be sure to check out their full webinar! You can also view a schedule of and register for upcoming live events like this one at the NinjaTrader Ecosystem’s Free Webinars page. You can also check out an extensive library of past events to learn even more on a variety of trading topics.

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