A trade thesis is the reason a trade exists: the market view that makes the trade worth considering, and the evidence that would confirm or invalidate it. It is the stated logic behind the entry, written before the trade.
How it works
The thesis combines the market view with a checkable condition: the evidence that would confirm the idea and the evidence that would break it.
It belongs in the plan's market view and entry rule: the reason, stated in a way that can later be checked against what happened.
Why it matters
A thesis makes a trade reviewable: you can ask whether the evidence that was supposed to confirm or invalidate actually appeared.
A trade without a written thesis cannot be evaluated later, because there is no record of what it was supposed to be based on.
A simple market example
A trader writes: 'I am trading this breakout because the range has compressed and a close beyond last week's high would confirm the move. A close back inside the range invalidates it.' That is a thesis with a confirmation and an invalidation.
Common mistakes
Trading without a written thesis, so there is no record of why the trade existed.
Rewriting the thesis after the outcome to make the result look justified.
Frequently asked questions
How is a thesis different from a prediction?
A thesis is a stated reason with evidence to check; a prediction is a claim about a specific outcome. The plan needs the thesis, not the prediction.
What should a thesis contain?
The market view, the confirming evidence, and the invalidating evidence, written before the trade.
Can a thesis be revised?
Yes, but add a dated revision with the reason, so the original logic stays auditable.
Educational content only. Definitions describe common market usage and may vary by jurisdiction, instrument, or institution.