On The Importance Of Cutting Losses:

“Whenever you buy or sell any
market, you have to ask yourself, ‘At what point will the market prove that I’m
wrong?’ Once you establish that point, nothing should stop you from closing out
when the market hits it. This is the basis for the rule: cut your losses short.
Violating this rule is the single biggest reason that people lose large sums of
money in the financial markets. It is a curiosity of human nature that no matter
how many books talk about this, saying the same thing in different ways, people
still keep making the same mistake.”