Sources
Sources and methodology for Trade Logic Test
This site uses public investor-education sources and a transparent scoring framework to explain pre-trade review. It does not use live market data and does not claim a proprietary hedge-fund model.
Editorial method
Each page states the educational purpose, formulas, hypothetical examples, limitations, and source trail. The calculator uses only visitor-entered assumptions. Current facts such as liquidity, volatility, market regime, and broker treatment must be verified through current market data and official documentation.
Review date
Reviewed and updated 2026-07-30.
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