Seven-step observation order
Context → Direction → Structure → Location → Evidence → Risk → Review. These steps organise observations and test a market view. They do not provide trade signals or remove market uncertainty. They are distinct from the seven course stages, which organise what to study.
State what would weaken or invalidate the conclusion and when to analyse again. Preserve uncertainty when evidence is insufficient; a possible path is not a certain outcome.
Context
Is the market trending, consolidating, testing a breakout or waiting for a major event? Describe its current state and define the question this analysis needs to answer.
Direction
Once the timeframe is chosen, how are the highs and lows moving overall? Fix the background timeframe before choosing one for detail; avoid switching charts until one supports the original idea.
Structure
Which swing points actually changed the path? Examine the highs, lows and their relationships to distinguish a pullback within the existing path from a change that calls for reassessment.
Location
Is price near previous highs or lows, support, resistance or a range boundary? Interpret the current move in relation to those areas instead of relying on an isolated pattern.
Evidence
What do candles, patterns, indicators or volume each add? Record supporting evidence, counter-evidence and alternative explanations. Several indicators calculated from the same price data do not automatically provide independent evidence.
Risk
What would prove the view wrong, and what is the maximum loss you are willing to accept? Write the invalidation condition and risk boundary in advance, and check how product specifications, costs and slippage could affect execution.
Review
Was the plan followed, and is the result just one observation in a sample? Review the reasoning, rule execution and outcome separately. One profit does not prove a sound process; one loss alone does not prove a method invalid.
Start with the question
Define the instrument, observation window and decision problem before looking for evidence. Changing the question after seeing the result weakens the review.
Separate facts from interpretation
Record source facts and observed price behaviour first. Keep interpretation, uncertainty and alternative explanations in separate statements.
Write the invalidation condition
A conclusion must be allowed to fail. Review process quality separately from whether a single market outcome happened to be favourable.
For trading education and general information only. LDTH does not provide investment advice, trade signals, brokerage, account handling, copy trading or any promise of returns.