Trade Validation — 10-Dimension Scoring Framework
Rule: NO trade executes without 80%+ weighted confidence score. Any single dimension below 4/10 = AUTOMATIC VETO.
Scoring Dimensions
| # | Dimension | Weight | What It Measures |
|---|---|---|---|
| 1 | Information Edge | 18% | Do we know something the market doesn't? |
| 2 | Source Quality | 12% | How reliable are our sources? |
| 3 | Market Efficiency | 10% | Is this market likely mispriced? |
| 4 | Time Horizon | 8% | How long is capital locked up? |
| 5 | Downside Protection | 15% | What's the worst case? |
| 6 | Cross-Validation | 12% | Do multiple independent signals agree? |
| 7 | Historical Accuracy | 5% | Track record on similar bets? |
| 8 | Liquidity/Execution Risk | 7% | Can we get in AND out? |
| 9 | Consensus Divergence | 8% | How far are we from market consensus? |
| 10 | Event Catalyst | 5% | Is there a known resolution trigger? |
Total: 100%
Calculation
Weighted Score = Σ(dimension_score / 10 × weight) × 100
Threshold Rules
| Weighted Score | Action | Bet Size |
|---|---|---|
| < 80% | ❌ NO TRADE | $0 |
| 80–84% | ✅ Minimum | $3–5 |
| 85–89% | ✅ Standard | $5–7 |
| 90%+ | ✅ Conviction | Up to $7.50 (max 10% bankroll) |
Veto Rules
- Any dimension < 4/10 → AUTOMATIC VETO regardless of total score
- Rationale: A critical weakness in any area (e.g., Liquidity = 2 means you're trapped)
Risk Management
- Max position: 10% of portfolio per trade
- Min market liquidity: $25 (below this, don't trade)
- Max open exposure: 30% of bankroll across all positions
- Daily loss circuit breaker: $8 loss in a day → ALL trading stops for 24 hours
- Cool-down: No trade within 1 hour of a loss
- No revenge trading: Last loss must be >24h ago OR new trade is unrelated
- No trading 12am–7am unless time-critical
Mandatory Counter-Arguments
Every trade MUST document:
- Why could we be WRONG? (not a strawman — a genuine strong counter-argument)
- What would change our mind? (specific falsification criteria)
- Exit strategy: When do we sell early?
Score Card Template
TRADE SCORE CARD
═══════════════════════════════════════════════════════════
Market: [name]
Date: [date]
Position: [YES/NO @ price]
# Dimension Weight Score Weighted
─── ────────────────────── ──────── ─────── ──────────
1 Information Edge 18% __/10 __._%
2 Source Quality 12% __/10 __._%
3 Market Efficiency 10% __/10 __._%
4 Time Horizon 8% __/10 __._%
5 Downside Protection 15% __/10 __._%
6 Cross-Validation 12% __/10 __._%
7 Historical Accuracy 5% __/10 __._%
8 Liquidity/Execution 7% __/10 __._%
9 Consensus Divergence 8% __/10 __._%
10 Event Catalyst 5% __/10 __._%
─── ────────────────────── ──────── ─────── ──────────
TOTAL 100% __._%
Minimum Score: __/10 (dimension: _____________)
VETO Check: [ ] All dimensions ≥ 4 — PASS / FAIL
Counter-argument: ________________________________
What would change our mind: _____________________
Exit strategy: __________________________________
RESULT: TRADE / NO TRADE
Tier: [ ] Min ($3-5) [ ] Standard ($5-7) [ ] Conviction ($7.50)
═══════════════════════════════════════════════════════════
Pre-Trade Checklist
RESEARCH
[ ] Minimum 3 independent sources consulted
[ ] Sources documented with links
[ ] Strong counter-argument documented
[ ] Counter-argument is genuine (not strawman)
SCORING
[ ] All 10 dimensions scored
[ ] Weighted score ≥ 80%
[ ] No dimension below 4/10
[ ] Score logged to trade journal
RISK
[ ] Current bankroll: $______
[ ] Bet ≤ 10% of bankroll
[ ] Total open exposure ≤ 30%
[ ] Daily loss < $8 (circuit breaker not triggered)
DISCIPLINE
[ ] Cool-down respected (1h since last loss)
[ ] Not revenge trading
[ ] Not trading 12am–7am
Detailed Scoring Rubric
See references/scoring-rubric.md for the full 1–10 rubric for each dimension.
Trade Journal
Log every scored trade (pass or fail) to projects/polymarket/trade-journal/:
## [DATE] — [MARKET NAME]
- **Score:** XX.X%
- **Result:** TRADE / NO TRADE / VETO
- **Position:** YES/NO @ XXc | **Stake:** $X.XX
- **Outcome:** WIN / LOSS / PENDING
- **P&L:** +/- $X.XX
- **Lesson:** (post-resolution)