This question brings up an important issue, namely: it's critical to set a trigger price that would create a sale BEFORE investing. There are no simple answers here, since every investors risk tolerance, time horizon, investment goals, etc. vary.
That said, a simple example illustrates the point. A short term trader is using a 50-day/200-day moving average signal for determining buy/sell decisions. When the 50-day average rises above the 200-day average, buy. When 50-day average < 200-day average, sell.
The strategy details will differ, depending on your situation, but having the buy/sell parameters in place before the trade is essential.
As to the specific point about when to cut losses, there's not enough information to offer an informed response. Much depends on the stock. For instance, a blue chip company that's down 20% is a different scenario vs. a penny stock.