The 3 Ground Rules

In this section we shall first explore our three Ground Rules followed by Three Entry Rules and then The Exit Setup. The Ground Rules are always there as non-negotiable constants. They lay down the foundation for the three Entry Rules. The Entry Rules create that moment in time-space when we are ready to trade; they help us recognise correct spots of entering markets.

The 3 Ground Rules

1. Enter the market on the breakout of The AIMS Box

• We want to enter the market when the price breaks out of The AIMS Box. We don’t to be impulsive so we shall always opt for using Pending Orders also known as Stop or Limit Orders.
• Price MUST be inside the AIMS Box before you put your pending order.
• Always check the distance between the upper and lower levels of the AIMS Box. For M1 anything more than 15 pips could be high risk. We want Tight Boxes.

2. Always Make Entries in the Direction Going Away from the Purple Line

We trade in the direction of the trend of 5 times higher time frame. For M1, the M5 is obviously the 5 times higher time frame. Hence, we trade in the direction of the Alligator on M5. As long as the price is at least above the Red Line of M5, we trade long Setups on M1. As long as the price is below the Red Line of M5, we trade short Setups on M1. The red line of the 5 times higher time frame roughly translates into the purple line on the current time frame. Since the Purple Line is the Red Line of M5 or 5 times higher time frame, we take our trend direction from the Purple Line. Besides interpreting the Alligator of M5, we also look at the angulations of the Purple Line of M1. We shall take Setups on M1 as long as we are trading in the direction going away from the Purple Line.  If you see a Setup on M1 but the trade direction is towards the Purple Line, you will be trading against the trend.

• Do not trade towards Purple Line unless you are comfortable with trading reversals or deliberately going against the trend.
• Do not trade into Alligator’s mouth.
• Do not feed the Alligator.
• Do not trade inside the Alligator’s mouth.
• If you trade towards the Purple Line on M1, you are trading into the Alligator’s mouth on M5.

As long as we are trading into the Purple Line, we are essentially trading against the higher time frame trends. If there is a Setup on M1 on the correct side of the Purple Line but against Purple of M5, we might still take the Setup but keeping in mind that we may be going against the trend or we may be hitting an early trend reversal. We never trade towards the Purple Line on M1. That’s the point.

3. Always Set Pending Orders – Never Trade Market Orders

Many traders have lost money by taking impulse trades – basically clicking the buy/sell (the bid/ask market orders) button. I suffered from impulse trading too, until I decided to cure this situation: I created the rule of “No More Market Orders”. It is April 2022 as I review this material and I can confirm that to date Market Orders have never benefitted me. We always set pending stop orders because our trade entries are always on the breakout of the AIMS Box. Never mind if you miss a trade because you couldn’t place a pending order in time, just say “NEXT” and you shall most likely see another opportunity present itself shortly. Do not confuse “Break of AIMS” with making a market order after it breaks the level. We must always set pending orders and wait for the price to trigger it. Some people do enter market orders when there is a good Setup and price closes just outside an AIMS Box, but there should be no need of doing that. Exceptions: Having said that, if you’re trading on swing time frames such as Hourly, Four Hourly or the daily time frame then you could make entries on market order as well if the entry is not too far from the most recent Box High or Box Low.