Simple Functions
GLOSSARY/ANALYSIS

Thesis

A thesis is a structured investment argument that combines a directional view, a causal model of why the view is correct, and specific market positions that express the view. In SimpleFunctions, a thesis is the core unit of analysis.

CLI:sf thesis create

What is a Trading Thesis?

A thesis is more than an opinion. It's a complete, testable argument about the future that includes:

  1. The claim: What you believe will happen (e.g., "The US will enter a recession by end of 2026")
  2. The reasoning: Why you believe it, structured as a causal tree
  3. The evidence: What data supports each branch of the causal tree
  4. The market expression: Which contracts are mispriced if your thesis is correct
  5. The invalidation conditions: What would prove you wrong

Thesis Lifecycle in SimpleFunctions

forming → active → paused → closed
  • Forming: You're building the causal tree and scanning for markets
  • Active: The agent is monitoring, evaluating signals, and executing strategies
  • Paused: Monitoring continues but no new trades are placed
  • Closed: The thesis reached its conclusion (right or wrong)

Creating a Thesis

When you run sf thesis create, the agent guides you through:

  1. Stating your thesis in plain language
  2. Building a causal tree by decomposing the claim
  3. Assigning initial probabilities to each node
  4. Scanning for markets that express the thesis
  5. Identifying edge opportunities
  6. Defining entry/exit strategies

Why Theses Matter

Without a thesis, you're just looking at contract prices and guessing. With a thesis, every trade has a reason, every price change maps to a causal node, and every exit has a pre-defined condition. The thesis is your decision-making framework — the agent is just the execution layer.

Example

sf thesis create "US recession by end of 2026"

Agent output:
  ✓ Thesis registered
  ✓ Causal tree generated (3 main branches, 8 leaf nodes)
  ✓ Market scan complete: 12 related contracts found
  ✓ Edge analysis: 4 contracts with >5pt executable edge

  Top opportunity:
    KXRECSSNBER-26 — Market: 28% | Thesis: 42% | Edge: +14pt | Liq: A

  Recommended strategy:
    Buy Yes below $0.30, stop at $0.18, target $0.45
    Max position: 500 contracts ($150 max risk)

Related Terms

Edge

Edge is the difference between the market price of a prediction market contract and your estimated true probability. Positive edge means you believe the contract is mispriced in your favor.

Thesis Confidence Score

Confidence is a 0-100% score that measures how certain you are about your probability estimates, not the probability itself. High confidence means your estimates are well-researched; low confidence means they're speculative.

Causal Tree

A causal tree is a structured probabilistic model that breaks down a complex event into a hierarchy of independent, verifiable sub-conditions. Each node has a probability, and the tree computes the overall probability of the root event.

Thesis-Implied Price

The thesis-implied price is the probability a contract should trade at according to your causal tree model. The difference between thesis-implied price and market price is your edge.

Evaluation Cycle

An evaluation cycle is the automated process by which the agent reviews new signals, updates causal tree probabilities, recalculates edge, and determines whether any strategy conditions are met.

← All glossary termsRead the docs →