If you have traded at all, surely you have heard the following phrase: Cut your losses short and let your winners ride. That is as true today as it ever was in the past.
Thursday’s market collapse was one of those days where if you hadn’t cut losers short and let winners ride, you would have really regretted it. Friday, the Dow is nearly down another -300 points. “Averaging down” is really adding to a loser, especially when the markets are being routed.