Skill: staybased/trade-validation (version 1.0.0)

--- name: trade-validation description: | 10-dimension weighted scoring framework for prediction market trade evaluation. Enforces disciplined position sizing, circuit breakers, and mandatory counter-arguments. Use when: evaluating prediction market trades, scoring opportunities, deciding position sizes, comparing Polymarket/Kalshi opportunities, running pre-trade checklists. Don't use when: general crypto analysis, DeFi yield farming, non-prediction-market investments, stock/equity analysis, sports betting (different framework needed). Negative examples: - "Should I buy ETH?" → No. This is for prediction markets with binary/discrete outcomes. - "What's the best DeFi yield?" → No. Wrong domain entirely. - "Score this sports bet" → No. Sports betting has different dimensions (injuries, matchups). Edge cases: - Crypto prediction markets (e.g., "Will BTC hit $X?") → YES, use this if on Polymarket/Kalshi. - Multi-outcome markets → Score each outcome separately. - Markets with <$25 liquidity → Auto-fail on Liquidity dimension. version: "1.0" --- # 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: 1. **Why could we be WRONG?** (not a strawman — a genuine strong counter-argument) 2. **What would change our mind?** (specific falsification criteria) 3. **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) ```


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