Chapter 20 · Hypothesis
What is wrong with trading as soon as an indicator signals?
- Skills to practice
- Research Edge
- Read first
- Chapter 19 · Return source
- 3D simulation
- None
Market scene
Lin writes, “Buy when the indicator strengthens.” Zhe asks: which market, which close, how long to hold, and when to admit error? Every question exposes multiple interpretations of the original sentence.
Zhe drafts: “When past-window gains accompany observable buying demand, enter at the next executable time and inspect net results over the specified horizon. Pause this research if demand does not persist.” It proves no profits, but another person can finally repeat the test.
Your decision
How will you turn an observation into a prediction allowed to fail? Choose before reading feedback.
Observe the result
A draft must be executable by another person and permit “not supported.” Complete fields reduce ambiguity; they do not make mechanisms true.
| Wording | Reproducibility | Explicit failure |
|---|---|---|
| Buy when it looks strong | Low | Easily rationalized afterwards |
| Explicit data, conditions, timing, horizon | Individually inspectable | Judged against original rules |
| Add filters after outcomes | Reproduces only the new story | Original hypothesis has changed |
The mechanism
Record observations, explain who acts and why, then express conditions, outcomes, and deadlines. Specify data known at that time and prerecord contrary evidence.
- Observe repeatable phenomena
- Propose economic causes
- Specify conditions and horizon
- Define data availability
- Freeze signals and exits
- Register failure and stop rules
Phase 4 requires three drafts with different sources, not three names for one idea. Test distinct payment mechanisms. The workshop flags missing fields and repeated sources; it neither estimates win rates nor approves trades.
What it is called
Real markets
Chapter 6 specifies invalidation before sizing. Generalizing similar cards into rules must retain those constraints.
Chapter 17 shows funding during holding. Rate-based hypotheses must state visibility and future changes that invalidate them.
Chapter 7 retains advance forecasts and deadlines. Strategy hypotheses also need original versions, not merely winning revisions.
Hands-on
Write hypotheses for three different return sources. Specify who pays and how the idea fails before the signal. This checks completeness, not whether the mechanism is true.
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Course versionV1-docs; sourcep3:report:strategy-hypotheses.md；Chapter 20 / TRD-STRAT-002
Records parameters and results at the click only; does not mean the experiment passed.View snapshot to save
- Select distinct return sources; write observations, participant mechanisms, and outcome windows.
- Specify sources, then-available times, signal rules, and identifiable regimes.
- Write invalidation evidence and pause actions. Check and repair missing fields or repeated sources.
- Copy/download drafts, saving versions and registration times. This is research only: no registration or orders.
Change one variable
Three depths
- FoundationWhat is wrong with trading whenever an indicator signals?Chapter 20
- AdvancedHow can you state a testable research question and preregister methods before viewing data?Advanced B · Strategy research
- InstitutionalHow should research manage hypothesis proposals, review, and rejection to avoid selective success reporting?Institutional
Someone should know what to observe, when to enter, and when to accept failure from your words alone. Revise unclear wording before trading.
Preregister candidates, metrics, splits, and stop conditions; each later change creates a version. Registration reduces degrees of freedom but cannot replace mechanism evidence; see Advanced B.
Continue the project: preregister hypotheses, primary metrics, and experiments.
Teams retain proposals, challenges, rejections, and revisions, giving counterevidence equal visibility. Field completeness and economic-logic reviews should record distinct conclusions.
Continue the project: keep failed candidates and promotion rejections.
Questions to take away
Chapter self-test
Only that fields are nonempty and sources differ—not that mechanisms are real, expectancy positive, or live trading appropriate.
It omits payment mechanisms, data timing, exit horizons, and failures.
Register a new version, retain original failures, and label viewed samples exploratory.
Not necessarily. Compare participants, constraints, and order chains.
One idea to take away
Indicators only describe the past. First state a refutable hypothesis: under what conditions, who must act, and how does that affect price?
Record this learning session
Read means only that you confirm reading this chapter. Self-tests are your assessments against reference conclusions. Neither certifies mastery or professional level. Each click retains a timestamped local record.
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What is wrong with trading whenever an indicator signals?
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Only your explicit declaration. Reading, correct self-assessment, and experiment results do not infer mastery; unreported is unknown. Revocation restores unknown and removes selected attachments.
Hypothesis：Not read
Falsifiable：Not read
Condition：Not read
Prediction：Not read
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