How to overcome a losing streak

The painful part of trading is losing

The best loser wins, they say. There might be days and weeks when you book no winner. You start questioning your capabilities, start to blame the market or your neighbor’s dog that have not let you sleep last night. Whatever the reason is, the solution is in your hands.

Step 1. - Back to basics

Are you following the plan? We can fall easily into the thinking that we got it sorted already and start to lean away from the process that used to work before. So check, if you are really following the same process which shall give you the expected edge. Adapt as necessary, focus on the deviations to get back on track. If you are doing many mistakes, see what the stats are showing for the trades where you don’t do the mistakes. I always look at my stats with mistakes and without mistakes to see the true potential, as mentioned in the previous post.

Step 2. - See the probabilities table

This one requires a little bit of explanation first. Let’s say your best month ever was like this

I have built a trade generator in Excel to see what I can expect of my current style. I generate 720 random trades to simulate one year of trading and, based on the success rate I am achieving in real life, then count the longest losing (or no winner) streak. Furthermore, I run the simulation 20 times and then average the losing streak count.

I highlight the worst and best numbers. What this table tells us is that over 720 trades performed, it is not unusual to catch 20 trades no winner losing streak, furthermore it shows that a 15 trades losing streak is inevitable. It will happen. The only question is when. Anomalies can happen too, but they are rarer. So before you start to change your whole life because of having 10 trades in a row loss, look at your data first. It might be just a normal part of your statistical edge. It also shows us what can we expect when we rise the success rate to 33% 40% or 50%.

If you don’t believe in pure statistical math, then start believing because on this month shown above, my losing streak was 12, and it was the start of the month and I was carrying over 3 losers from the previous month which makes it 15 in a row for a no win. It looked awful for the first 5 days of trading on that month, but eventually I caught a winning streak afterward. So don’t lose your mind and trust your process. If it is showing you, that it shall work, it will work, if you execute it without many mistakes.

Even 50% success rate will give you 9 trades no win, and it is inevitable. If you do not have such excel capabilities, do a coin flip test with a pen and paper and see, or send me a message and I will be happy to share with you the generator.

Step 3. Get inspiration to start thinking positively

Look for some traders videos that cover the topic of losing to get back some positive energy. There are plenty of them on social networks and trading communities, which you are probably watching already. Just give yourself the time to watch it, even if it seemed useless to you before.

Step 4. Give yourself a break

If you are still having bad feelings about your trading after you have done the above steps, give it a break for a while. But do not get me wrong here. Many traders skip it directly to this step and never do the prior steps, so they return to the same state as they paused.

Step 5. Get a coach

You could have a coach at first place obviously, as with guidance from more experienced traders you shall overcome the issues more easily as the experienced people will guide you in a way not to fall into many pit holes of trading and they will probably guide you through the above 4 steps as well.