A repeatable sequence for separating observation, explanation, risk, and uncertainty.
By the end, you should be able to
- Separate observation, inference, and prediction.
- Check liquidity, supply, venue, and source quality.
- State what would invalidate a thesis.
From signal to conclusion
A disciplined sequence keeps uncertainty visible.
Observe+18%Name window + source
Compare3 metricsTest explanations
ChallengeInvalidationDefine what changes your view
1. Describe before explaining
- What moved, by how much, and over what window?
- Which venues and sources are represented?
- Is the move large relative to normal volume and liquidity?
2. Test competing explanations
- Could this be broad market movement, a project catalyst, or thin liquidity?
- Do price, volume, market cap, supply, and order books agree?
- What important data is missing or stale?
3. Define risk before action
- What is the downside if the explanation is wrong?
- How do fees, slippage, custody, leverage, or counterparty risk matter?
- What observation would make you revise or abandon the thesis?
What this does not tell you
- A checklist cannot remove uncertainty or unknown risks.
- More data can create confidence without improving source quality.
- A coherent thesis can still be wrong.
Write a five-sentence research note
Keep facts, inference, and uncertainty separate.
- Sentence 1: observed move and window.
- Sentence 2: source and liquidity context.
- Sentences 3–4: two competing explanations.
- Sentence 5: invalidation evidence to watch.
Check your understanding
1. What is a strong research conclusion?
2. Why test competing explanations?
3. What makes an invalidation useful?