Losing streaks run longer than most traders expect. Over 100 trades, a 6-in-10 strategy usually hits 4 losses in a row, and a 3-in-10 strategy usually hits 10. Most people guess 2 or 3.
A losing streak is a run of losing trades in a row. The fewer trades a strategy wins, the longer its losing streaks run, even when it makes the same money.
The free lesson on this page asks you to guess the longest losing streak. Then it takes 100 trades and shows the answer.
After that it runs the same strategy again, up to hundreds of times.
How many losses in a row should you expect?
It depends on how often the strategy wins. Over 100 trades:
| Wins in 10 | Typical longest losing streak | Chance of 10 or more in a row |
|---|---|---|
| 7 | 3 | under 0.1% |
| 6 | 4 | 0.6% |
| 5 | 6 | 4% |
| 4 | 7 | 21% |
| 3 | 10 | 58% |
| 2 | 15 | 93% |
"Typical" is the median longest streak across every possible run of 100 trades. The numbers are worked out exactly for each win rate, with the same odds on every trade.
Does a losing streak mean your strategy stopped working?
Not on its own. The 6-in-10 strategy loses 6 or more in a row in about 1 run of 100 trades in 5, with nothing wrong with it.
In real trading you never know your odds this exactly. While a streak is happening, you cannot tell a normal one from a broken strategy.
Keep each loss small enough to survive either one. Lesson 3 shows what small enough means.
A streak does not make the next trade more likely to win either.
Why do low win rate strategies have longer losing streaks?
Each loss is more likely, so losses line up more often.
Win 3 trades in 10 at $300 per win and you earn $200 every 10 trades. So does one that wins 6 in 10 at $100 per win.
The 3-in-10 strategy's streaks are a different size. In a typical run of 100 trades the worst streak is 10 losses in a row, and about 1 run in 8 reaches 15.
Plenty of traders drop a strategy, or break its rules, somewhere in a 15-loss streak, right before it pays off.
What does a winning streak tell you?
About as little as a losing streak. A strategy that wins 7 trades in 10 typically has a best streak of 10 wins in a row over 100 trades, and about 1 run in 6 reaches 14.
Every one of those runs used the same odds on every trade. The strategy did not get better during the streak.
Sizing up after a hot run puts the bigger size in front of the next losing streak.
Key points
- A strategy that wins 6 in 10 typically loses 4 in a row over 100 trades, and 6 or more about 1 time in 5.
- Win 3 in 10 and the typical worst streak is 10 losses in a row.
- A streak, winning or losing, says little about whether the strategy works.
- Plan your risk for the longest streak you are likely to see.
Press Start above and make your first guess. Next: how much to risk per trade, so a streak like that stays survivable.