Happened to me more than once. A few losing trades in a row, and I start trying to get it back. Then leverage goes up, I overtrade… and boom, account gone. Any tips on how to stay in control during those moments?
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Use fixed position sizes, never increase leverage impulsively and don’t forget to keep a trading journal to learn from mistakes.
Well, if you have a major devastating losing streak, just stop trading at all…that is it. Go out, skip trading for a week if not more, dont check charts, prices…forget it, let your mind rest.
Or , if not so sever, the best would be to scale down.
U know, Steven Cohen once said in his Market Wizzard’s interview - “If you start to lose and unsure why, just cut yoir poisitions in half. If it still goes against you, cut it again in half” This way you will greatly reduce your exposure.
Then, to get back on track, start slowly - and scale up progressively too.
Yeah, that makes sense. If a losing streak hits hard, sometimes the best thing is just to step away for a bit clear your head, don’t look at charts, let yourself reset.
If it’s not too bad, scaling down works well. Like Cohen said: cut positions in half if things go wrong, cut again if needed. Then when you’re ready, start small and build back up gradually. Keeps both your money and mindset safe.
Dealing with losses is also a trading strategy. That said, losing streaks may have two sources: absence of edge in the markets, and unpredictable market behaviour which is a phase every skillful trader must encounter.
Where it is the former, you ought to learn from a mentor who trades for a living, or acquire more knowledge to improve your trades, and don’t forget to journal your trades. In the event it is the latter, your best bet is to stay the process while navigating that period of losses. Market conditions may not be favourably suited to your trading edge hence the losses.
There are other angles to dealing with losing streaks like taking a trading break, meditating, engaging in some form of exercise, going back to demo, etc, and while some may find them useful, others may not. All that matters is what works for you like every trading strategy.
More common than either of these, I think, is a third “source,” which is just a predictable losing run, according to your win rate.
Most retail traders greatly underestimate the length of predictable losing runs.
Many are even optimistic enough to do some kind of backtest, see what the longest losing run observed was, multiply it by about one-and-a-half and then imagine that that’s the longest losing run they’re likely to encounter, and that they’ll be “safe,” that way. I know it sounds extraordinarily ill-informed and naive, but I’m sure it’s what many people (who don’t understand probability much, if at all) do .
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Another thought: losing streaks aren’t the really problematic issue, anyway.
Not for most people.
Losing patches are.
You’re just as likely (perhaps even a fraction more likely) to have a long losing run immediately after a first long losing run was followed by a single winner as you are at any other time.
Very few people allow for that, though, simply because they don‘t understand that they should.
Almost nobody ever tells them, either, often because they people from whom they’re getting their advice don’t quite understand it themselves.
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Are you suggesting, for example, using a position size of .05 all the time, regardless of market conditions or stop loss distance?
Your position size should fluctuate, it’s your risk that should stay consistent.
I’ll risk up to 3% on a trade, but depending on where I put my SL, my position size will be different every time.
When I risk 3% that’s because my SL is miles away. When I risk 0.5 or 1% then that’s because I’m using a tight SL.
Beginners should keep risk low until they find a strategy that works. It doesn’t matter if you have a $500 account or a $100,000 account, if you don’t have a proven strategy risking more won’t help you.
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Simply don’t trade. My rule is pretty simple: whatever is the outcome of my trade, I just don’t open anything on that day. Once I enter, I close my laptop and just monitor the trade through a mobile app. When the trade is closed, I don’t like doing another analysis and entering through the mobile. This “laziness” saves me from overtrading.
Ohh, this one is very hard. Back in the days I would get stressed out pretty bad… Because I would always think that something is wrong with my trading strategy, but in reality that was not the case.
How did I realize it?
All in all, I automated my trading strategy, as it was pretty simple and mechanical. Trade happens once in a day during the NY market open, and it really doesn’t require my presence at all. Anyway, I built an algo and backtested it for the past few years. What I noticed was pretty interesting… I saw that during summer and May month my strategy usually performs poorly and ends up being in negative profits compared to other months. And that makes sense, my strategy depends on high volatility breakout and trades continuation of it, but during summer price action is pretty choppy. That’s when I understood that my strategy is profitable, but has a season where it’s better to stay away from the markets.
Risk a fixed percentage of your bank. Bank goes down stake goes down - bank goes up stake goes up. There is another tread on this somewhere.
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For me, losing streaks are usually a sign I’m either overtrading or trading the wrong conditions.
I’ll cut size immediately (or stop for a day or two), review only the last 10–20 trades, and check if the losses are coming from the same mistake (late entries, moving stops, trading news, etc.). If the plan was followed, I accept it as variance. If not, I don’t “win it back” — I fix the process first.
The hardest part is doing nothing, but that’s often the best trade.
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