02 No Loss Rule

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Banner image illustrating the No Sell at a Loss Rule in Micro Harvesting, showing a prohibited loss sale symbol, downward price chart, and disciplined harvesting imagery.
The core Micro Harvesting rule prohibiting loss realization, enforcing time-based resolution and disciplined capital protection.


📘 No Sell at a Loss Rule (Micro Harvesting Context)

Policy Name: No Sell at a Loss Rule (Micro Harvesting Context)
Version: v1.0
Status: ✅ LOCKED
Effective Date: December 21, 2025
Applies To: Micro Harvesting Portfolio (all active harvesting positions)


1. Purpose

This rule defines the absolute prohibition against realizing losses within the Micro Harvesting system.

Its objectives are to:

  • Preserve capital integrity and psychological stability

  • Eliminate panic-driven exits and regret trades

  • Shift risk management from price-based to process-based discipline

  • Reinforce time as a valid resolution mechanism

  • Maintain harvesting as a probability and patience exercise

Loss avoidance is a structural rule, not a tactical preference.


2. Definition of “No Sell at a Loss”

Within Micro Harvesting, No Sell at a Loss means:

A position shall not be sold if its Net Unrealized P/L (Net UPL) is negative at the time of exit.

A realized loss is not an acceptable outcome under harvesting operations.


3. Scope and Applicability

This rule applies to:

  • All active harvesting positions

  • All RTS transactions

  • All harvesting frameworks operating under Micro Harvesting

This rule does not apply to:

  • SUNSET liquidations governed by SUNSET protocols

  • Non-harvesting strategies outside Micro Harvesting

  • Administrative or structural portfolio reclassifications


4. Governing Principles (Non-Negotiable)

  1. Time is allowed to resolve adverse price movement.

  2. Capital preservation overrides trade frequency.

  3. Unrealized loss is a state, not an outcome.

  4. Patience is a valid risk management tool.

  5. Harvesting ends only in profit or inactivity.


5. Handling Positions in Negative UPL

When a position enters negative Net UPL:

  • No sell action is permitted

  • No averaging down is required

  • No repair trade is initiated

  • No emotional intervention is allowed

The position transitions into a Pending Harvest state.


6. Pending Harvest Doctrine

A Pending Harvest position is defined as:

An open position temporarily unable to meet harvest criteria, awaiting a future opportunity to exit at a compliant Net UPL.

During Pending Harvest:

  • Capital remains deployed

  • Monitoring is reduced

  • No forced timelines exist

  • Attention shifts to other eligible positions

Pending does not mean problematic. It means inactive.


7. Relationship to Other Governance Protocols

This rule operates in conjunction with:

  • Harvesting Policy v1.0

  • Non-Action Is a Valid Action Principle

  • Micro Harvesting Portfolio Structure Rule

  • Removal Is Neutral Principle

  • SUNSET Governance Protocol v1.0

In case of conflict:

  • SUNSET and structural governance rules override harvesting mechanics.


8. Explicit Prohibitions

The portfolio manager shall not:

  • Sell to “free capital” at a loss

  • Rationalize loss-taking as discipline

  • Reframe loss exits as “risk control”

  • Lower harvest thresholds to escape drawdowns

Any such action constitutes rule violation.


9. Behavioral Safeguards

The portfolio manager shall not:

  • Obsess over unrealized losses

  • Continuously monitor Pending Harvest positions

  • Anchor emotionally to breakeven levels

  • Treat waiting as failure

Waiting is compliance, not delay.


10. Meta-Rule

In Micro Harvesting,
losses are not managed by exits—they are managed by time and rules.


Change Log

  • v1.0 — December 21, 2025
    Initial codification and lock-in of the No Sell at a Loss Rule (Micro Harvesting Context).



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