A trading rule is a set of predetermined conditions that will trigger the purchase of a stock (long),
the selling of an unowned stock (short),
or the selling of an owned stock.
As an example, a very simple trading rule might be to buy
a stock 24 hours after a company has issued its earnings
report.
A more complex rule might be to buy a stock when its price
goes above its 200 day moving average, and to sell it when
its price drops below its 200 day moving average.
Trading rules are the trade secrets of automatic trading
systems and brokerages.