Observation, hypothesis, measurement, small live size, review. The sequence that turns curiosity into a system.
Key takeaways
- An edge starts as an observation about repeated behaviour, not an indicator.
- Measure before you trade; trade small before you scale.
- Six months of one instrument beats six weeks each of six instruments.
Month one: observe. Pick one instrument and one timeframe and watch it daily, recording what repeats. Does the first hour's range contain the day? Do gaps beyond a size tend to extend? Do not trade; describe.
Month two: hypothesise and measure. Turn the observation into a rule with objective conditions and count how often it happened and what followed, over as much history as you can gather. Most observations die here, which is the point.
Months three and four: trade it live at minimum size. This exposes the practical issues — fills, timing, ambiguity — and produces a real sample with real emotions attached.
Month five: review the sample for expectancy and adherence. Fix execution before touching the rules; most early underperformance is execution, not design.
Month six: scale gradually if the numbers hold, and only then consider a second instrument. The traders who arrive at a durable edge are almost always the ones who resisted variety long enough to accumulate evidence about one thing.
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