What you will learn
- Context conditions
- Entry trigger
- Invalidation
- Time-based expiry
Context conditions
Context describes the conditions under which a setup is considered, such as a defined range or trend state. Use observations that can be recorded at the time. Context should narrow the question, not become a vague justification added afterward.
Entry trigger
An entry trigger is a specific event that makes an order eligible. State the price stream, interval and whether confirmation requires a close. Separate signal time from order submission and fill time.
Invalidation
Invalidation describes when the idea no longer satisfies its premise. A protective order implements part of that plan but may fill differently from its trigger. Record both the analytical condition and execution behavior.
Time-based expiry
Expiry ends eligibility when a setup has not entered within a specified window or relevant conditions change. A stale working order can create exposure after the original context has disappeared, so cancellation rules belong in the playbook.
Worked example
A breakout setup requires a completed bar above a reference level. The bar temporarily trades above but closes below. Under that rule there is no confirmed trigger, even if an intrabar chart looked promising.
Try it yourself
Write the context, trigger, invalidation and expiry for a hypothetical setup without using words such as obvious or strong unless defined numerically or procedurally.
Show the worked solution
A valid specification lets another learner classify the same observations. It identifies exactly what data is needed and when. The result is a testable hypothesis, not evidence that the setup will make money.
Apply this to your course project
Create two contrasting playbooks and replay them on a reserved chart sample.
Keep the calculation inputs, assumptions and decisions with your work. Practical exercises are self-reviewed; the scored knowledge checks assess the questions shown, not an independent certification of practical competence.