SFO article
Hi Jay (call me Mark)
Glad to hear you found the article helpful.  Thank you.
1)Why 2 x 5?  Good question.  To a point, choosing the ratio was close to random - but - because my primary purpose was to sell puts I had to be certain that I received enough cash when opening the position to make it worthwhile.  In other words, if the stock were to open 5 point higher the next day, and I were unable to sell my long puts at any price (because of no bids), then I wanted to have a reasonable profit.  2 x 5 gave me enough cash to satisfy that condition. 
As I said, it's sort of random.  The lower the ratio, the less downside risk.  Thus, on these spreads, I try to find a combination of downside risk and upside reward that makes me comfortable.  Each trader has a different comfort zone and risk tolerance.
2) Much more difficult question.  It's important not to let a few large losses wipe out many winning trades.  There are no hard and fast rules for me.  I often cut losses when the stock give a sell signal on my charts.  But, I am not a strong believer in technical analysis, so besides charts, I cut losses when I no longer believe the stock will behave as I hoped it would or when potential losses look too large. 
Time I hold the trade is not important (to me), so that does not count in making the 'take loss' decision.  I don't want to evade the question, but each trader needs his own rules for getting out of losing trades.  One sound rule might be:  Risk no more than x% of you capital in any single trade.  If you lose that, quit.  Many traders use 2% as a rule of thumb.  Thus, a trader with 100,000 in capital cuts losses at 2,000 for any given trade. 
You are very welcome.

A very helpful article.  Two questions.

1.  Why did you do a 2 by 5 spread?  What criteria did you
use?  The amount of the credit, the risk/reward, etc?  Why
not a 3 by 7 or a 1 by 2?  
2.  On page 72, second paragraph "Knowing when to cut losses
is a crucial skill....."  What types of criteria do you use
to cut losses; support resistance, moving averages, days in
the trade, etc? 
Thank you so much for answering these questions.

Jay Goldby