08 Probabilistic Exit

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Visual representation of probabilistic exit decision-making, where harvesting actions are guided by probability, optionality, and information gain rather than certainty.

📘 Probabilistic Decision Rule (Exploratory Harvesting)

Policy Name: Probabilistic Decision Rule (Exploratory Harvesting)
Version: v1.0
Status: ✅ LOCKED
Effective Date: December 21, 2025
Applies To: Micro Harvesting Portfolio (designated exploratory and volatility-harvesting positions only)

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1. Purpose

This rule governs exception-based harvesting decisions when strict threshold harvesting is no longer statistically favorable, while preserving the integrity of the core Harvesting Policy.

Its objectives are to:

• Allow intelligent flexibility without rule erosion

• Prevent mechanical stubbornness when probabilities deteriorate

• Distinguish discipline from rigidity

• Preserve capital efficiency in volatile, short-lived moves

• Explicitly separate probability-based decisions from emotional reactions

This rule exists to manage edge decay, not to increase discretion.

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2. Definition of Probabilistic Decision-Making

Probabilistic Decision-Making is defined as:

A harvesting decision based on the declining likelihood of reaching the standard harvest threshold, rather than on the presence of unrealized profit alone.

The decision is driven by probability deterioration, not fear or impatience.

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3. Scope and Limitations

This rule applies only to:

• Stocks explicitly designated as Volatility Harvesters

• Exploratory or burst-driven price behavior

• Situations where the Core Harvest Rule becomes statistically unlikely within a reasonable window

This rule does not apply to:

• Standard Harvesters

• Level 6 positions

• Long-duration or stability-focused stocks

Exploratory harvesting is opt-in and restricted.

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4. Relationship to the Core Harvest Rule

The 1.5%–2.0% Net UPL Harvest Rule remains primary and unchanged.

The Probabilistic Decision Rule:

• Does not replace the core rule

• Does not redefine success

• Does not lower system-wide thresholds

It provides a narrow exit valve when edge quality degrades.

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5. Conditions That Justify Probabilistic Harvesting

A probabilistic harvest may be executed only when all of the following are observed:

1. Initial Volatility Expansion Occurred

   • Price moved rapidly from entry

   • Momentum was present and measurable

2. Momentum Deterioration Is Evident

   • Volatility contracts materially

   • Follow-through weakens

   • Price stalls near resistance or congestion

3. Probability of Reaching 1.5% Declines Materially

   • Risk-to-reward degrades

   • Time decay becomes unfavorable

4. Net UPL Is Positive (≥ 1.0%)

   • Loss exits remain prohibited

Failure to meet any condition prohibits probabilistic harvesting.

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6. Execution Parameters

When all conditions are met:

• Harvest may occur at ≥ 1.0% Net UPL

• Partial or full exit is permitted

• Decision must be treated as exploratory, not optimal

This is a risk-reduction exit, not a profit-maximization action.

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7. Explicit Prohibitions

The portfolio manager shall not:

• Use probabilistic harvesting to bypass discipline

• Systematically lower harvest thresholds

• Apply this rule retroactively

• Treat probabilistic exits as standard wins

• Use indicators to manufacture justification

This rule must remain rare and accountable.

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8. Documentation Requirement

Each probabilistic harvest shall be logged with:

• Stock name and level

• Reason probability deteriorated

• Net UPL at exit

• Confirmation that core thresholds were unlikely

Documentation exists to prevent normalization.

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9. Relationship to Other Governance Protocols

This rule operates in conjunction with:

• Harvesting Policy v1.0

• Non-Action Is a Valid Action Principle

• RTS (Rotating Trading Shares) Doctrine

• Level Promotion / Demotion Protocol v1.0

In case of conflict:

• Core harvesting and level governance rules prevail.

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10. Behavioral Safeguards

The portfolio manager shall not:

• Feel rewarded by early exits

• Increase trade frequency due to “success”

• Convert exploratory behavior into habit

• Reframe discipline as missed upside

Exploration is allowed. Habit is not.

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11. Meta-Rule

When probability collapses,
discipline is choosing the least harmful exit—not the most exciting one.

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Change Log

• v1.0 — December 21, 2025
  Initial codification and lock-in of the Probabilistic Decision Rule (Exploratory Harvesting).

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