Cutting Losses Short Is Critical To Success

Let’s face it, not all stocks you buy
are going to be winners.
Even when you buy at the right
time, some stocks will be below
your buying price in a matter of
days or weeks.
So what now? When you first
planned out the trade, you should
have also figured outhow you’d sell
in caseyou werewrong.
Stock investing is not so easy. No
matterwhatyoudo, there’snoguarantee
that a stock will move in your
intended direction.
Successful investing is part offense
and part defense. When
you’re right, you want to let your
winners run, but when you’re
wrong, you want to lose the least
amount of money possible.

The above rule is not intuitive.
Also high volatile stocks go up and down. For example watch LVS action in the last 30 days. See how many times it went down by 8% and up same. Of course this one is may not be a great example as it is speculative stock.

RIMM could be a better example. Stock went down by 14% after earnings which fell to 79 I believe. It went down and fond floor around 65.