Drawdowns and losing streaks: the maths every trader needs
Every trading strategy has losing streaks, including the profitable ones. The question isn’t whether you’ll have one, but how long it will be and whether your risk per trade lets you survive it. The maths is simple, and knowing it in advance takes a lot of the fear out of a bad week.
How long a losing streak should you expect?
Here’s the chance of seeing at least one losing streak of a given length somewhere in 100 trades, assuming each trade is independent:
| Win rate | 4 in a row | 5 in a row | 6 in a row | 8 in a row | 10 in a row | Typical longest |
|---|---|---|---|---|---|---|
| 40% | 99.9% | 98% | 87% | 49% | 20% | about 8 |
| 50% | 97% | 81% | 55% | 17% | 4% | about 6 |
| 60% | 80% | 46% | 21% | 4% | 1% | about 5 |
Read that first row again. With a 40% win rate, which is perfectly profitable at 1:2, you’re all but certain to lose 5 in a row in 100 trades, and it’s a coin flip whether you’ll lose 8 in a row. That’s not a broken strategy. That’s arithmetic.
Why drawdowns are harder to climb out of
Down 20% → need +25% · Down 30% → need +42.9% · Down 50% → need +100%
A 10% drawdown is an inconvenience. A 50% drawdown means doubling what’s left just to get back to zero. Protecting the account from deep drawdowns matters far more than squeezing out extra return.
Your risk per trade decides everything
Here’s what 10 losses in a row does to an account at different risk levels (each loss a percentage of the balance at the time):
| Risk per trade | After 10 straight losses | Gain needed to recover |
|---|---|---|
| 1% | down 9.6% | +10.6% |
| 2% | down 18.3% | +22.4% |
| 5% | down 40.1% | +67.0% |
The same streak, the same strategy. At 1% it’s a bad fortnight. At 5% it’s nearly half the account and months of recovery. This is why professionals obsess over position size: it’s the one variable that decides whether a normal losing streak is survivable.
How to handle a drawdown well
- Know your numbers first. Your win rate and the streaks it normally produces (table above).
- Keep risk fixed or reduce it. Never increase size to recover. Some traders halve their risk after a 5R drawdown until they’re back to a new high.
- Check you’re still following the plan. A drawdown from following your rules is variance. A drawdown from breaking them is a discipline problem, and the fix is different.
- Judge the strategy on the sample, not the streak. Look at 30, 50, 100 trades, not the last 8.
- Use a daily and weekly loss limit so a streak can’t all happen in one emotional afternoon. See how to stop revenge trading.
Know your real win rate
The Trader’s Ledger shows your win rate, average R and equity curve in R, overall and by setup, so you know exactly what streaks to expect and whether a drawdown is variance or rule-breaking. £19 once.
Get The Trader’s LedgerRelated: risk to reward and the win rate you need, and how to calculate lot size.
Frequently asked questions
How many losing trades in a row is normal?
It depends on your win rate. At 50%, a run of 5 or 6 losses in 100 trades is normal; at 40%, 7 or 8 is normal.
How much do I need to make back after a 50% loss?
100%. After losing half the account, you have to double what’s left to get back to where you started.
What is a good maximum drawdown for a trader?
Many traders aim to keep drawdowns under 10–20%. Risking around 1% per trade makes deep drawdowns far less likely.
Should I stop trading during a losing streak?
Not necessarily. Check you followed your plan. If you did, the streak is likely normal variance; keep risk fixed or reduce it, and use daily and weekly loss limits.
Educational content only, not financial advice. Trading carries a high level of risk and you can lose more than you expect. Examples use illustrative prices.