Losing streaks
A streak of five to eight losses in a row is normal mathematics, not a broken system.
Losing streaks — what it is?
A losing streak is several unsuccessful trades in a row. At any win rate below one hundred percent such streaks are not merely possible but statistically guaranteed.
At a 50% win rate a run of seven losses in a row shows up regularly over a hundred trades. It is not a broken system and not a sign that the market has changed.
Understanding that streaks are inevitable is the main defence against tilt. People break not from the loss but from the surprise of the loss.
Losing streaks — how it is built?
Work out in advance what streak is likely at your win rate and calculate what it will cost at your risk. That number has to be known before the streak starts, not during it.
Losing streaks — common mistakes
Changing the system after the third loss in a row.
Increasing size to win the streak back.
Treating a streak as proof that the system has stopped working.
Not knowing in advance what streak is normal for your statistics.
Related to
Glossary
- losing streak
- several losing trades in a row. At any win rate below 100% such streaks are statistically inevitable.
- win rate
- the share of profitable trades. On its own it says nothing about the result without the R:R.
- Tilt
- the state where decisions come from emotion rather than the plan. It is recognised by acceleration: the time between decisions shrinks, the position size grows.