OOPS - Now what to do? It is so easy to sail merrily along when every trade is working well, and the good ol account balance is just going up up and away. What do you do when you find yourself in a bad trade?

I have been sailing along with one winner after another for awhile now and all of the sudden I find myself in a bad situation as portrayed to the left. I am short the bonds( red carrot) at very close to the low of the year, what a dummy right?

I don't think so, here is why. This may in fact be a losing trade. My stop is above and may be taken out, time will tell. I have very strict rules for trading and investing my money, and I address this on my website. Trading does involve taking losses, it is part of the business. I have an appropriate risk % on this trade, so one loss will not wipe me out. If someone cannot accept that, this is not for them. My track record for this system YTD is 14 out of the 16 trades prior to this have been wins. Am I smart enough to arbitrarily guess that this one might be the next loss, ignore the rules, and exit early cutting my losses?

The answer is absolutely not. I wrote previously about general things that did support a possible bond market rally. The commercials are long, and we are in the range of the typical seasonal low. Other fundamental things have not lined up with those two other things as of yet. However, those are general overview conditions. When it comes down to actual trading, I rely on my trading systems that have served me well in the past. I will do that here as well, win or lose.

Moral of the story - nobody wants to lose money in a trade, but sticking to your plan will result in this happening at times. If someone gives in to the emotion of the moment, they will never be successful as a trader.