Retest the entry before you exit

Opening comments outnumber exit rules

Commentary on opening a position is described as plentiful, while comparable guidance on when to exit is described as scarce.

Emotional attachment to a favored holding is one reason people delay an exit. Another is a paper-loss-delay, which treats an unrealized decline as not yet a loss and postpones the exit decision.

Adds and targets still need the full test

Adding shares after a decline to lower average cost is framed as a less painful substitute for selling. The move still requires a decision about whether the position remains valid.

Reaching a pre-set price goal is treated as a prompt to reassess, not as a sufficient reason by itself to liquidate.

Isolated triggers are incomplete

Isolated triggers are presented as incomplete unless they feed a fuller review. Those triggers include first adverse news, a sour tape, a tip, or the first pullback after a rise.

A single-factor-exit uses an isolated news item, a tip, a first pullback, or a target print as if it were a complete sell rule.

A first downturn after a gain is treated as a weak stand-alone exit. A holding horizon of four or five years is offered to reduce selling at the first setback.

Restated results, a missed estimate, a shift in the industry, or signs of weak leadership are listed as reasons to reopen the exit question, not as automatic one-factor orders.

Two tests decide hold or exit

The decision test offered is whether the original evaluation factors still apply and whether the same holding would be purchased again at the current price.

The original-reasons-check re-evaluates the factors that justified the entry and treats a material change in enough of those factors as the sell condition.

The repurchase-test asks whether the same holding would be opened again at the current price. A no keeps liquidation on the table.

If the original reasons for the position remain intact, the procedure points to holding. If enough of those reasons have changed, the procedure points to an exit.

Filters sit inside the procedure

A position-concentration-limit is a ceiling on how large any one holding may become relative to account equity, applied before and during the position.

The archive guideline limits any single holding to 20 percent of a portfolio valued under 100000, or 10 percent of a larger one. That limit is a portfolio-balance action rather than a price forecast.

A price-bound-filter is a pre-set target, downturn, or stop-style threshold that bounds a loss or a give-back but still requires the rest of the checklist.