The FTSE 100, which crashed to a five-year low on February 11, bounced back by nine per cent over just four days to regain the 6000 mark on Wednesday. It makes for testing times for small investors, but shows the wisdom of the standard ‘don’t panic’ advice being proffered by the experts 10 days ago.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “We’re in a trampoline market right now, where stocks are bouncing around wildly almost every day. The implication is that fundamentals have gone out of the window and sentiment is dominating market movements.”

So it makes sense to keep calm and carry on. “With markets so volatile, both buying and selling are likely to be painful experiences in the short term,” Khalaf says. “But long term investors can take some comfort from the fact that the chance of getting a positive return from stocks increases with time spent in the market.”

But that is easier said than done.

A survey from online investment group Willis Owen reveals that UK savers and investors have lost some of their appetite for financial risk compared with a year ago.

Only 15per cent said they are willing to take a reasonable or substantial risk – down from 20 per cent a year ago. The proportion of people not prepared to take any risk at all with their finances rose from 40 to 45 per cent.

The same picture emerged from this month’s Bank of Scotland Investor Sentiment Index, which showed overall sentiment falling to its lowest level since May 2013, and sentiment towards UK equities falling to half its level just a month earlier.

Liz Rees, head of research at Willis Owen, commented: “Risk appetite had been growing among UK savers and investors, but the last 12 months has reversed the trend.” She said market volatility, the oil price and the EU referendum had all created uncertainty, and it “might also be evidence of investors getting their fingers burnt in 2015, when there were weaker returns than in previous years”.

Rees went on: “However, while the reasons for erring on the side of caution may be evident, the fact is some risk is necessary in order to secure a decent return on investments.”

Donald Gateley, head of private banking at Bank of Scotland said: “This is a time for calm heads and careful research. As the trend of ‘growth’ investing dissipates, we may now be entering a period where investors have a preference for sectors with more predictable earnings.”

He added: “It is notable that some investors seem to be adopting an increasingly negative attitude even towards lower risk assets, such as government bonds, which have seen performance improve in the last month. This shows the current levels of uncertainty among investors.”

But savvier investors are using the markets’ panic over oil to their financial advantage, according to private wealth manager and expat specialist deVere Group.

As the markets bounced back last week, chief executive Nigel Green said: “It’s our experience in recent weeks that a growing number of global investors are turning their backs on the herd mentality. They’re seeing the important buying opportunities that are presenting themselves.”

He claims: “Feeding new money into the markets now is a wise strategy. If you look at the current macroeconomic situation, it is generally quite positive across much of the world.”

Tilney Bestinvest’s managing director Jason Hollands said: “There’s a lot of anxiety unfurling in the markets at the moment, with fears ricocheting between several concerns which combine into a towering wall of worry.” He said these included the risk that a sharp devaluation in China could spark global deflation, the prospect of defaults in US high-yield bonds triggered by the depressed commodity prices, concerns about European banks, and the spectre of ‘Brexit’. He added: “What has been a game-changer in recent months has been a growing sense that central banks are no longer in control of the situation.

“While we went into 2016 with a cautious outlook, and believe the current volatility could continue for some time, we also believe that recent declines make for a far more attractive entry point.

“For truly long term investors, it is important not to get blown off course by the short term white noise of weekly market moves but instead to focus on building a robust, well-diversified portfolio that will stand the test of time. For those concerned about the sharp swings in markets, a sensible strategy is to drip feed their cash in over a period of weeks or months.”

Adrian Lowcock, head of investing at AXA Self Investor, says: “One of the most difficult things to admit in investing is that you got it wrong and made a mistake. However, if you are able to sell a poor investment before it gets worse you will preserve your money and may be able to reinvest into a better investment. Likewise no-one ever lost money taking a profit. The best fund managers recognise their mistakes quickly and get out, they also sell their successes once they think the investment has become expensive, even though the share price might continue to rise.”