Originally Posted by
Bubba Zanetti
If the chain falls off when shifting to the smaller cogs, the rear deraileur is not applying enough tension on the chain as the cage swings back. Shift it to the smallest cog and bounce the bike up and down while observing the chain. If the chain looks really loose, you need more tension my adjusting the deraileur or taking chain links out.
I think this makes sense. Looking at the photo, the chain is on the biggest cog and the derailleur is still hanging straight down. It should be pretty extended in that position. Looks like you can take 2 or 3 links out.