What a losing streak does to your account
Streaks are normal. Planning for them is what keeps you trading.
Every strategy has losing streaks, including good ones. The question is never "will it happen?" but "can I survive it when it does?"
How likely are they?
If you win half your trades, there's a slightly better than even chance of seeing six losses in a row somewhere in 100 trades. If you win 40% of the time, which is normal for traders aiming at 1:2 or better, it's roughly a coin flip that you'll see eight in a row in 100 trades.
That's not bad luck. It's just maths.
Why the hole gets deeper
Losses and gains aren't symmetrical:
| Drawdown | Gain needed to recover |
|---|---|
| 10% | 11.1% |
| 20% | 25% |
| 30% | 42.9% |
| 50% | 100% |
Lose half your account and you need to double what's left just to get back to where you started.
What helps
- Small risk per trade. At 1%, eight losses costs under 8%.
- Judging the plan, not the result. A good plan that loses is still a good plan. A bad plan that wins was luck. Your debrief on this site separates the two.
- Stepping away. Streaks invite revenge trades. A short break costs nothing.
Key points
- Losing streaks are a certainty over enough trades.
- Size every trade so the streak you'll eventually meet doesn't end your account.
Related terms
- Drawdown
- How far your account has fallen from its highest point.
- Losing streak
- A run of losing trades in a row. Every strategy has them.