Trace the trigger through the market
This note uses a hypothetical position. State the trigger, observation window, and invalidation condition. “Risk appetite falls” is too broad to tell the team whether to monitor spot, options, funding, flows, or collateral.
Separate the external trigger, the change in market structure, and the effect on the position. Preserve the delay between them so that simultaneous movement is not mistaken for causation.
- Which venue or instrument moves first.
- How leverage and collateral demand respond.
- Whether market-making depth or counterparty limits contract.
- Whether an on-chain transfer reflects trading, custody, or internal movement.
Write down disconfirming evidence
Negative funding may reflect directional shorts or hedging. Exchange inflows may precede selling or a custody move. A scenario table should state what observation would weaken the current interpretation.
End with executable actions
Any response must account for trading hours, order-book depth, impact cost, collateral, and approval. A model can close a position at a price that the market would never provide.