A loss on the sale of stock or other securities is not recognized for tax purposes if a purchase of a similar stock or security puts the taxpayer in the same investment position. This rule applies to any sale where the taxpayer acquires substantially identical securities during the 30 days after before or 30 days after the sale. The rule will also apply to purchases of options to buy substantially identical securities during the same period.
The definition of substantially identical depends on the facts of the situation. For individual stocks, it's a simple affair not to run afoul of the wash sale rule. You simply need to sell your stock for a loss, and then if you want to continue market exposure, you just need to make sure that you're in a different stock. With mutual funds and exchange-traded funds, it gets trickier to book your loss in one fund and redeploy into another. For example, in the case of index funds, don't switch out of one family's fund and into another fund company that tracks the same index.
If you're trying to keep exposure to a particular size or style of stocks, there are different indexes that can help you accomplish your goal, such as the capitalization weighted S&P 500 Index versus an equal-weight index.
Also, if you thought you might be able to get around the wash sale rule by replacing the sold security with the same or substantially identical one in your IRA, think again. In 2007, Revenue Ruling 2008-5, the IRS explicitly said this would run afoul of the wash sale rule.