If you want to lose weight, eat less and move more. If you want to make money in the stock market, cut your losses short and let your winners run. But neither losing weight nor making money is as simple as aphorisms make it seem. Not even Jesse Livermore, who is probably the most widely quoted trader of all time, was able to follow his own advice. This is from the excellent Jesse Livermore- Boy Plunger (emphasis mine):
“It seems incredible that knowing the game as well as I did, and with an experience of twelve or fourteen years of speculating in stocks and commodities, I did precisely the wrong thing…The cotton showed me a loss and I kept it. The wheat showed me a profit and I sold it out. It was an utterly foolish play, but all I can say in extenuation is that it wasn’t really my deal, but Price’s. Of all speculative blunders, there are fewer greater than trying to average a losing game. My cotton deal proved it to the hilt a little later. Always sell what shows you a loss and keep what shows you a profit. That was so obviously the wise thing to do and was so well known to me that even now I marvel at myself for doing the reverse…..And so I sold my wheat, deliberately cut short my profit in it. After I got out of it, the price went up twenty cents a bushel without stopping. If I had kept it, I might have taken a profit of about eight million dollars. And having decided to keep on with the losing proposition, I bought more cotton.“
I enjoy clever sayings as much as the next guy, but with money on the line, instincts and emotion takes over and no amount of trading quotes can save you from yourself.