Think Like A Scientist- Use The Scientific Method in the Stock Market

S method

 

6 Steps of the Scientific Method

 

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Does this help improve your investment approach?

  • The scientific method is a way to ask and answer scientific questions by making observations and doing experiments.
  • The steps of the scientific method are to:
    1. Ask a Question – Should I buy or sell?
    2. Do Background Research – Study the price action?
    3. Construct a Hypothesis – Long or short?
    4. Test Your Hypothesis by Doing an Experiment – What IS actually happening in the market?
    5. Analyze Your Data and Draw a Conclusion – Does my thesis align with the market (what is actually happening, not what you think will happen)?
    6. Communicate Your Results – Formulate a sound back-tested trading plan

Source: http://www.sciencebuddies.org/science-fair-projects/project_scientific_method.shtml

 

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