Selling rules — defense first

Buying gets all the attention, but the selling rules are where a rules-based system actually earns its keep. They split into defense (cutting losses while they’re small) and offense (taking gains while they exist) — and defense comes first, because of arithmetic that doesn’t care how good your stock picking is.

The math that makes the stop rule non-negotiable

A loss and the gain required to recover from it are not symmetric. Small losses cost almost nothing to repair; big ones require the kind of gain you can’t count on ever getting:

Losses compound against you: recovery cost grows much faster than the loss. The stop rule exists to keep every mistake in the top row.

Hence the rule: sell any position that falls a fixed percentage below your cost — the app’s default is 8% — without exception and without debate. You will sometimes be stopped out of a stock that comes right back; that whipsaw is the insurance premium. What the premium buys is that no single idea, however wrong, can do damage you can’t recover from.

The app tracks the stop on every open position, sums them into portfolio heat, and — the uncomfortable part — measures after the fact how often you actually honored it and what ignoring it cost.

The offense rule: take most gains at 20–25%

Most sound breakouts advance 20–25% past the pivot and then pull back to build a new base. So the base rule is the mirror of the stop: take most profits into strength at +20–25%, rather than riding every winner back down while waiting for a monster.

The compounding argument: three sequential +20% singles grow capital by about 73% — more than one +50% trade, with three chances to be right instead of one long exposure to being wrong.

The one exception — the fast-mover rule. A stock that gains 20%+ within three weeks of its breakout has shown unusual power; the rule is to hold it at least eight weeks before judging, because that profile is where the rare 100%+ winners come from. The exception is earned by speed, never granted by hope.

The whole trade plan on one ladder: risk is capped at −8%, entries stay within +5% of the pivot, and most profits are taken at +20–25%.

Warning signs that end a run

Beyond the two mechanical rules, the classic sell signals are about recognizing distribution in the stock itself:

Climax run — after months of advance, the stock suddenly goes nearly vertical: its fastest gains and widest daily spreads of the entire move. Exhilarating, and historically how big runs end, not how they begin.
Heaviest-volume reversal — a new high in the morning that closes near the day’s low on enormous volume: distribution in one bar.
Breaking key support on volume — a decisive close below a widely watched long-term moving average (the 10-week / 50-day line is the usual reference) on heavy volume, after the line had held for months.
The round-trip rule — never let a meaningful gain (10%+) turn into a loss. If a winner comes all the way back to your cost, the thesis already failed once; the app’s giving-back-gains pattern counts how often you’ve paid for not acting on this.

Caveats

The percentages are defaults, not physics — the app makes the stop and buy zone configurable because volatile stocks and calm ones don’t wear the same numbers. What is not configurable is the principle: decide the exit before the entry.
Selling rules grade poorly in hindsight one trade at a time (every stopped stock that rebounds feels like a mistake) and extremely well in aggregate. Judge them on your closed-trade history — the attribution report and mistake patterns exist for exactly that.
Our plain-English wording of publicly documented selling disciplines; educational reference, not investment advice.