Quantify the bet
Calculate reward/risk, portfolio risk, capital committed, breakeven probability, and expected value.
Trade review desk · updated 2026-07-30
Would a Hedge Fund Take Your Trade? Take the Logic Test
Run a transparent 0–100 trade-plan score before putting capital at risk. The point is not to impress a mythical hedge fund; it is to expose weak logic while the trade is still optional.
Run the logic testStandalone value
A pre-trade committee in calculator form.
The test gives you the full score, formula breakdown, red flags, missing information, improvement plan, stress loss, and printable checklist without requiring a community join. The Options Formula CTA appears only after the useful tool and education.
Institutional-style logic test
This deterministic framework grades the quality of your plan from 0 to 100 using transparent formulas. It does not know any hedge fund's proprietary model and it does not pull live market data.
Score the trade before the trade scores you
Overall score
Transparent scoring appears here.
Category breakdown
Strongest parts
Weakest parts
Red flags
Improvement plan
Printable pre-trade checklist
- Write the thesis, entry trigger, and invalidation point in one paragraph.
- Calculate max loss, reward/risk, breakeven probability, and expected value.
- Check portfolio risk, capital committed, and overlapping exposure.
- Review liquidity, volatility environment, catalyst timing, and stress loss.
- Define profit-taking, loss-management, and what would make you skip the trade.
Educational framework only. No universal hedge-fund scoring formula exists. This model uses common risk-management and portfolio-review principles, relies only on visitor-entered assumptions, and must not be treated as investment advice or as affiliation with any hedge fund.
Interrogate the plan
Check whether the thesis, catalyst, entry criteria, invalidation point, and exits are specific enough to act on.
Respect the portfolio
A trade can be logical in isolation and still be too correlated, too illiquid, or too large for the account.
CategoryMaxWhat earns pointsCommon deductions
Thesis and identifiable edge15Clear thesis, entry criteria, independent confirmationsVague thesis, excitement-only timing, weak factors
Expected value and payoff20Positive EV, acceptable reward/risk, realistic probabilityNegative EV, poor reward/risk, unsupported probability
Position sizing and capital at risk15Risk and capital fit the portfolioLarge portfolio risk, undefined max loss
Correlation and concentration15Low overlap and diversified riskHigh existing exposure or unknown overlap
Liquidity and execution10Tight spreads and realistic fillsWide spreads, poor liquidity, slippage risk
Volatility and regime fit10Structure matches volatility and market regimeTrade fights regime or ignores volatility
Catalyst and timing5Specific catalyst or testable triggerNo timing reason
Exit plan and invalidation10Clear target, loss plan, invalidation pointNo exit plan or no invalidation
Primary reading: Investor.gov risk tolerance overview · FINRA options overview and risk · SEC Investor Bulletin on options · OIC options pricing overview · OCC Options Disclosure Document
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Related lessons and tools on this site
Institutional-Style Trade Logic TestComplete Scoring Formula and MethodologyExpected Value in Trade ReviewPosition Sizing and Risk BudgetingCorrelation and Concentration RiskLiquidity and Execution QualityVolatility and Market-Regime FitCatalyst and Timing QualityExit Plan and Invalidation ChecklistTrade Logic Score ExamplesTrade Logic Test FAQSources and Methodology for Trade Logic Test