Defining Rules

5 min readUpdated March 15, 2026

Defining Rules

Rules are the building blocks of every strategy in TraderNest. While a strategy defines your overall trading approach, rules are the specific, measurable criteria that make up that approach. The more precise your rules, the better TraderNest can analyze your discipline and show you the cost of breaking them.

What Makes a Good Rule

A trading rule must be specific and measurable. Vague rules like "follow the trend" or "manage risk properly" are useless because neither you nor the AI can objectively determine whether you followed them. Good rules are binary — you either followed them or you did not.

Compare these examples:

  1. Bad rule: "Don't overtrade." — How many trades per day counts as overtrading? 3? 10? 50?
  2. Good rule: "Maximum 5 trades per day." — Clear, measurable, binary.
  3. Bad rule: "Use good risk management." — What does "good" mean?
  4. Good rule: "Risk no more than 1.5% of account balance per trade." — Exact, verifiable.
  5. Bad rule: "Trade during active hours." — Which hours?
  6. Good rule: "Only open new positions between 09:00 and 20:00 UTC." — Precise, time-bound.

Rule Categories

TraderNest organizes rules into four categories within each strategy:

Entry Rules

These define the conditions that must be met before you enter a position. Examples:

  1. "Enter long only when the 9 EMA is above the 21 EMA on the 15-minute chart."
  2. "Only enter after a confirmed breakout above resistance with at least 2 consecutive candle closes above the level."
  3. "Minimum R:R of 2:1 before entering any trade."
  4. "No entries within 30 minutes of a major economic data release."

Exit Rules

These define how and when you close positions. Examples:

  1. "Take profit at 2:1 R:R. Move stop to break-even after 1:1."
  2. "Close 50% of position at first target, trail stop on remaining 50%."
  3. "Never widen a stop loss once placed."
  4. "Close all positions before funding rate resets."

Risk Management Rules

These protect your account from catastrophic losses. Examples:

  1. "Maximum 2% account risk per trade."
  2. "Maximum 3 simultaneous open positions."
  3. "Maximum 10x leverage on any position."
  4. "Stop trading for the day after 3 consecutive losses."
  5. "Maximum daily drawdown of 4% — stop trading if hit."

Timing Rules

These restrict when you are allowed to trade. Examples:

  1. "Only trade between 08:00 and 18:00 local time."
  2. "No trading on Sundays."
  3. "Do not trade in the first 15 minutes after waking up."
  4. "Wait at least 30 minutes after a losing trade before entering a new one."

How to Add Rules to a Strategy

1

Open Your Strategy

Go to Strategy in the sidebar and click on the strategy you want to add rules to.

2

Click "Add Rule"

You will see the option to add a new rule within each category (Entry, Exit, Risk Management, Timing).

3

Write Your Rule

Type the rule in clear, specific language. Remember: if you cannot objectively determine whether a trade followed the rule, the rule is too vague.

4

Set Importance (1-5 Stars)

Rate the rule's importance. A 5-star rule is one that, if violated, almost always costs you money (like "never trade without a stop loss"). A 1-star rule is a preference that can be bent occasionally (like "prefer to trade only trending pairs").

5

Save

The rule is now part of your strategy and will be used by AI Hawk for pattern detection and Plan vs Actual analysis.

Rule Limits by Plan

  1. Free plan — 0 rules
  2. Starter plan — 15 rules (across all strategies)
  3. Advanced plan — Unlimited rules
Tip: Start with 5-7 rules for your main strategy. Too many rules make it hard to follow any of them. Once you consistently follow your initial rules, you can add more to refine your approach.

How AI Hawk Uses Your Rules

Every rule you define feeds into two powerful features:

  1. Plan vs Actual — TraderNest calculates what your P&L would have been if every trade perfectly followed every rule. The gap between "actual" and "plan" shows you the exact dollar cost of your discipline failures.
  2. Pattern Detection — AI Hawk detects when you repeatedly violate specific rules. If you break your "no trading after 21:00" rule three times in a week, Hawk Eyes will flag it and estimate how much it cost you.
Important: Rules only work if you honestly evaluate your trades against them. When reviewing a trade, ask yourself for each rule: "Did I follow this?" Dishonest self-assessment defeats the entire purpose of having rules.

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