The hardest part of any trade is the exit. Entries get the analysis; exits get the emotion. This journal removes the emotion by fixing five default exits before any structure is opened. Every trade-log entry is managed against these five. They are the standing operating procedure — a specific entry may tighten them, but never loosens them.
The five exits
1. Time stop — 1–3 days post-event. Most structures on this journal are opened around a catalyst: FOMC, CPI, earnings, an auction. Once the event has passed and the market has repriced, the reason for the structure decays fast. If the thesis hasn't paid within 1–3 days after the event, close it. Time decay is now working against the position with no catalyst left to rescue it.
2. Profit target — 50–100% of debit. Take profits mechanically. For a structure entered at a $2.00 debit, the profit target zone is $3.00–$4.00 of value ($1.00–$2.00 of profit). Don't hold a defined-risk structure to max profit hoping for the perfect pin — the last 20% of a butterfly's payoff requires the underlying to land on an exact strike, and hope is not a strategy. Scale or close into strength.
3. Loss stop — 50% of debit. If the structure loses half its debit, the thesis is wrong or the timing is wrong — either way, the market has spoken. Close it. Defined risk caps the worst case, but the loss stop keeps small losses small instead of letting every loser ride to max loss. A $2.00 debit that trades at $1.00 is closed, no debate.
4. Boundary stop — outside the body, close. For butterflies and condors, the short strikes are the thesis. If the underlying closes through the short body — above the short calls of a call butterfly, below the short puts of a put butterfly — the structure's reason for existing is gone. Close the position rather than hoping price comes back inside the tent.
5. Manual override. The desk can always close early for a reason it can write down in one sentence: a regime change, a broken assumption, new information that invalidates the thesis. The override must be documented in the position's update log the same day. "Gut feel" without a written reason doesn't count — if you can't articulate it, it's emotion, and emotion uses exits 1–4.
How they work together
The five exits are checked in order, and the first one triggered wins. A butterfly that hits +75% of debit on day two after CPI is closed on the profit target — it doesn't wait for the time stop. A condor that drifts through its short strike in week one is closed on the boundary stop — it doesn't wait to see if it comes back.
The point of the system is that the exit decision is made once, calmly, before entry — and then executed without negotiation. Every trade-log entry on this journal records which exit closed it, or which exits are armed while it's open.
What the exits don't do
They don't predict. They don't optimize. A time-stopped trade will sometimes rally the next day, and a profit-targeted trade will sometimes run to max profit after you're out. That's the cost of discipline, and it's priced in: the journal's edge comes from structure selection and sizing, not from perfectly timing exits. The exits exist so that no single trade can damage the book — everything else is upside.