If you are risking $200 on a trade, and you are -$200, then you need to exit the position. However, if you let it go to -$500 or more, then you are breaking the rules of your plan. This is when trading becomes gambling.
The rules we have in our trading plan are put there for the well-being of the trader. They are non-negotiable. If you have an office job and you decide not to show up for 5 days in a row without telling your boss, there is a good chance you’ll be fired. Why? Because you didn’t fulfill the duties of the job. Trading is no different. If you don’t follow the rules of your trading plan, you will be fired. How? The market will take your money and your account will dwindle down to nothing and you will be forced to quit, aka: fired.
Any negative comment you hear about trading or likening trading to gambling is almost always related to the trader having a lack of discipline, which has nothing to do with the patterns working or not working. It’s no different than someone who dumped their entire 401k in February 2009 at the bottom of the market (after a 40% drop) then watched the market go higher for 8 straight years, and then blames it on ‘the crooks on Wall Street.’ That is simply a lack of understanding of the markets, or in our case, trading.