We close every tracked signal at +10% or -15%. It's a simple rule, and simple rules invite an obvious question: would we have done better just holding? Here's what the −15%/+10% mechanic actually did to our 2026 signals, and the honest trade-offs.
What the rule is built to do
The exit logic is mechanical and discretion-free. A tight +10% target banks gains while the insider thesis is still fresh; a wider -15% stop gives a position room to wobble without getting shaken out on noise. The asymmetry assumes the edge shows up as a high hit rate, not as occasional moonshots.
A +10% target caps your winners. A -15% stop caps your losers. The strategy is betting that capping both, with more winners than losers, beats letting everything run.
What the rule gave up
The cost is real and worth naming: a +10% target sells some positions that went on to double. If your edge occasionally produces a +80% winner — and insider buying in small caps sometimes does — a mechanical target leaves that on the table. Holders capture those tails; rule-followers don't.
What the rule protected against
The other side: the -15% stop closed positions before a few of them fell much further. Holding through a broken thesis is how good track records quietly bleed out. In a quarter where the S&P itself was negative, the stop did meaningful work limiting the downside on signals that didn't pan out.
| Approach | Strength | Weakness |
|---|---|---|
| +10% / -15% rules | Bankable, testable, caps losses | Sells big winners early |
| Hold indefinitely | Captures the tails | Rides losers, undefined risk |
The net result
Across our backtest of 210 purchases, the mechanical rules produced an 89% win rate and beat the S&P 500 by roughly ten points over the window. Live tracking since late December has stayed positive against the benchmark with a more modest edge. The mechanical version wins on consistency and auditability — every exit is reproducible, with no hindsight. See the full ledger on the track record and the aggregate in the 2026 performance report.
Why we keep it mechanical anyway
Discretionary exits are where backtests go to die. The moment you allow "I'll hold this one because I have a good feeling," the record stops being a record. We'd rather give up some upside than give up the ability to honestly say: these are the rules, and this is exactly what they did. The rules themselves are documented in the methodology.
Not financial advice. Past performance does not guarantee future results.