Question: Right after the event, I felt shocked and depressed. I've been engaging in stocks for about a year now but I've never encountered such a big jump in such a short time. What I'm planning to do is just wait for it to rise again, which I'm not sure when. (Well, who is?)

**What should my mindset be?** 

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I understand that there are already lots of questions regarding **When should I sell?** or **Should I set a stop loss?** For me, this question is not 100% about how to protect your money, but it's more of **In extreme cases like this, how should I mentally prepare myself?**

I anticipate that there will be comments/answers like "we can't give advice if we don't know the exact stock in topic" or somewhere along those lines. I want to pre-emptively tackle this and say that this question is not only for my specific current case. I'd prefer answers to be generic for everyone facing the same problem.

Answer: 
You bought the stock at some point in the past. You must have had a reason for this purchase. Has the recent change in price changed the reason you bought the stock?

You must assume your losses are [sunk costs](http://en.wikipedia.org/wiki/Sunk_costs). No matter what action you take, you can not recover your losses. Do not attempt to hold the stock in the hopes of regaining value, or sell it to stop losses. Instead approach this event as if this very day, you were given shares of the company's stock at their current market value for free as a gift. In this hypothetical situation, would you hold the shares, or sell them? Use that to judge your options.

Not everyone, myself included, can handle the mental stress of watching share prices change. You can always consider trading index funds instead, which are much less volatile but will provide consistent, albeit, boring returns. This may or may not be you, but it's an option.

Finally, do not keep money in the market you are not prepared to lose. It seems obvious, but if you lost 40% today, you could lose 100% tomorrow.
I haven't seen anyone mention tax considerations and that's why I'm answering this. The rest of my answer is probably covered in the aggregate of other responses.

Here's how I would look at this in a taxable (not an IRA) account:

This could be an opportunity to harvest the tax losses to offset taxable gains this year or in future years. Unless I have compelling reasons to believe that the price will recover by at least (Loss% x ApplicableTaxRate) in the next 31 days then I would take the known - IRS tables - opportunities over the unknown.

Here's what I would consider for all accounts:

Is this the most likely place to earn a good return on my money and is it contributing to a strategy that fits my risk tolerance? You might need to get some emotional distance from the pain to make this determination objectively.

As you consider your trading and investment strategy going forward consider that when it hurts and you have to pull yourself up by the bootstraps to think clearly about your situation, you were most likely trading with too much size for you in that particular position. I'm willing to make exceptions to that rule of thumb, but it's a good way to use the painful losses as a gut check on how your strategy fits your real situation.

P.S. All traders experience individual losses that hurt and find their way to the most suitable strategies for them through these painful experiences.