Cutting Losses is equally important, here is why?
The policy of limiting losses in stock market is similar to paying insurance premiums. You reduce your risk to exactly the amount you are willing to take. Granted, many times the stock you sell will immediately turn around and go up. You will probably get very agitated and think you made the wrong decision if that does happen. Investor wants to protect against the possible chance of a larger potentially devastating loss from which it may not be possible to recover.
If a person bought XYZ stock last year at Rs 400 and it drops to Rs 300, he/she may think to buy it more and average the price down. Now, when it drops to Rs 200, he/she may add again. And finally, when it drops to Rs 75, that person might be out of market after incurring huge loss. So, never argue with the market. It is very important to review your stocks periodically and reduce/avoid the further losses.