How to Handle a Losing Streak

Five losses at one percent

A losing streak is a run of losses inside a method that is still being followed. Five losses in a row at one percent of the balance, with these as example figures: 10,000 becomes 9,900, then 9,801, 9,703, 9,606 and 9,510. The dollars risked on each trade shrink with it, 100, then 99, 98, 97, 96, because one percent of a smaller balance is a smaller number. The streak took 490 dollars, 4.9 percent. The sixth trade risks 95, the same one percent of what is left. The percent did not move. The sixth trade is a smaller trade, not a different one, and that is the whole of what the arithmetic has to say about it.

Rain on one stretch of road

Picture rain on one stretch of road. The road is the method, the same road before the rain, under it and after it; the rain is the streak, over one stretch. Nobody rebuilds a road because it rained on it, and nobody turns round on a road because of weather. But the rain is what the driver can see, and from inside it the road looks like the problem. A losing streak is weather on the method. It is felt as a verdict on the road, and the difference between the two is what handling a streak comes down to: the road is judged over the whole journey, and the rain is judged by looking at the sky.

This paper is locked