Losers Average Losers — Risk Management
‘Losers average losers’ is a popular Wall Street saying. So is ‘cut your losses short and let your winners run’. They’re both true, at least in my experience. Shortly before the recent market bloodbath, I’d incorporated strict controls by exiting trades at a 10 percent loss. Yes, the exits piled up recently, but it saved my ass. Now if I could find some winners to let run. God knows when that will be.
I decided on the 10 percent level after reading Trade Like a Stock Market Wizard: How to Achieve Super Performance in Stocks in Any Market: