š„ The most dangerous thing in a losing streak isnāt the loss itselfā¦ but the decisions you might make afterward.
š Learn Trading with Derar-Hadri | Lesson 77: How to Handle a Losing Streak?
A losing streak is a natural part of trading, even when you use a well-thought-out strategy.
The problem begins when a trader tries to make up for losses quickly, increases risk, or enters trades that donāt match their plan.
The goal during a losing period isnāt to Ā«get the money back immediately,Ā» but to protect your capital and make sure your decisions remain disciplined.
š Hypothetical educational example:
Letās assume you risk 1% of your capital in each trade, and you lose 4 trades in a row.
The mistake is raising the risk on the fifth trade to 5% or 10% to make up for what was missed.
The best approach is to stick to your predetermined risk, and review the previous trades to see whether the losses happened despite following the planāor due to execution errors.
ā How to deal with a losing streak?
ā¢ Donāt increase your risk size to make up for losses.
ā¢ Review your last trades calmly.
ā¢ Distinguish between a normal loss and a mistake in applying the strategy.
ā¢ Reduce your activity temporarily if you notice your decisions are being affected by emotions.
ā¢ Donāt change your strategy because of a small number of trades.
ā ļø Common mistake:
Entering a Ā«revenge tradeĀ» right after a loss.
This kind of trade often isnāt based on a clear plan, but on the desire to get the money back quickly, which can multiply the damage.
šÆ Key takeaway:
A losing streak doesnāt only test your strategyā¦ it also tests your discipline.
A good trader doesnāt try to get revenge on the marketāhe protects his capital until the right conditions return for his strategy.
š¬ When you lose several trades in a row, what do you usually do: pause a bit to review, or keep trading?
Note: This content is for educational purposes only and not financial advice.
