That salvation is by God’s grace through faith and not by works is considered an axiom of protestant theology. We are not put into a right relationship with God through any work of our own, but only by faith in what Christ has done in our stead. If this is true, what place (if any) has ethics and holy living in a Christian’s life?
First of all I think it’s important to recognize that, as Frame says, “Repentance and faith are opposite sides of a coin.” In faith we turn to Christ, and in repentance, we turn away from sin. It is in effect, the same motion—one act necessitates the other. Calvin also speaks about the sanctification that follows justification, “as soon as any one is justified, renewal also necessarily follows: and there is no dispute as to whether or not Christ sanctifies all whom he justifies.” The reason this is true is because justification is a supernatural act of the Holy Spirit in a person’s life. The faith that enables us to take hold of Christ is a gift of God’s grace (Eph. 2:8), but that gift is never in isolation, there will be a change of desire in the heart of the person receiving the gift—a turning away from sin and turning to things that please God (e.g. the “good works” of Eph. 2:10). This is the type of faith that James refers to also. Just as the body without the spirit is dead, James suggests that without works faith ceases to be (James 2:26)—it is not true biblical faith, but becomes a mere profession of faith.
This is not legalism because it is not an attempt to gain God’s favor or conform to rules as an end in themselves, but simply a recognition that if the Holy Spirit has brought a conviction of sin and granted faith, there will be a desire for things that please God. I believe this is the warning Paul is giving in 2 Cor. 13:5 when he admonishes the Corinthians to examine themselves, to see if they are “in the faith.” If Jesus Christ were in them, they would have a desire to know and follow the meek and gentle nature of Christ. This warning is important for the church today as well. Many professing believers have a very superficial devotion to Christianity and “would be forced to admit they do not love holiness, do not pray, do not hate sin, do not walk humbly with God. They stand in the same danger as the Corinthians; and Paul’s warning applies to them no less than to the Corinthian readers of this epistle.”
Ultimately, I think the way we avoid both legalism and antinomianism is by growing in our appreciation and gratitude of God’s grace in salvation. We cannot begin to pay God back (or even measure) the grace He has shown to us in saving us from our sin (cf. 2 Cor. 5:21), nevertheless, our lives should display an attitude of thankfulness. And thankfulness, as Frame says, “is not only a feeling, but a disposition toward actions that express that thankfulness.”
 John M. Frame, The Doctrine of the Christian Life, A Theology of Lordship (Phillipsburg, NJ: P&R Publishing, 2008), 331.
 John Calvin and Hendry Beveridge, Tracts Relating to the Reformation, vol. 3 (Edinburgh: Calvin Translation Society, 1851), 116.
 Douglas J. Moo, The Letter of James, The Pillar New Testament Commentary (Grand Rapids, MI; Leicester, England: Eerdmans; Apollos, 2000), 144.
 D. A. Carson, A Model of Christian Maturity: An Exposition of 2 Corinthians 10–13 (Grand Rapids, MI: Baker Books, 2007), 182–183.
 Carson, A Model of Christian Maturity, 184.
 Frame, The Doctrine of the Christian Life, 335.