After how many losses do you decide you are not following your system?

[notagain]

 

[farmerjohn1324]

2 losses in the morning and I take a break until the afternoon session. Then same thing. So, 4 losses in a day and I close everything down until tomorrow.

What timeframe do you trade in?

 

[schizo]

How many? The point when you decide "sh*t! I might be deviating from my rules" or thinking its time to review the strategy again?

If you have a positive expectancy of 60%, you will lose 4 times out of 10 trades. So in theory, you could have 4 straight losers. The key is to not deviate from your strategy and stick it out to the bitter end.

 

[Sekiyo]

If you have a positive expectancy of 60%, you will lose 4 times out of 10 trades. So in theory, you could have 4 straight losers. The key is to not deviate from your strategy and stick it out to the bitter end.

At 60% you can expect to lose x, in a raw, for every y trade

 

[newwurldmn]

It only takes one trade to know if you aren’t following your system. It takes quite a few to determine if your system is worth following.

 

[comagnum]

After how many losses do you decide you are not following your system?

What I look at is:

Am I following my trading plan?
Would I take that same trade setup again?
Was my stop in a bad spot - would the trade have worked out

 

[Dazz]

only if loss = gain then percent loss is meaningful.
If a system is 70% successful, there is a 30% or .3 chance of loss per trade.
for 2 loses in a row it is 0.3 x0.3 or 9% likelihood so expected
for 3 loses in a row or roughly 3 out of 100 so getting rare
for 4 loses, it is 0.0081 or less than 1 in 100 so getting very rare.
help?

 

[Sekiyo]

only if loss = gain then percent loss is meaningful.
If a system is 70% successful, there is a 30% or .3 chance of loss per trade.
for 2 loses in a row it is 0.3 x0.3 or 9% likelihood so expected
for 3 loses in a row or roughly 3 out of 100 so getting rare
for 4 loses, it is 0.0081 or less than 1 in 100 so getting very rare.
help?

Guess what matter is deviation from what you believe.

If you believe your system has 80% win,
And you end up with 5 consecutive losses twice within 100 trades then you might be either 1. Doing something wrong 2. Not knowing your system “true” potential.

 

[MaccabiTrader]

it depends... after all even a strategy with 50% winning %, means you will experience 500 losses for every 1,000 trades... and to think that there will not be times where you will get 50 losses in a row, well thats just being human...

the key to a robust strategy, is that you are able to automatically scale down your risk when things arent working well... and continue until it turns around...

If after 5 losses your ready to throw away or rejig your strategy... you have just failed.

 

[ironchef]

It takes quite a few to determine if your system is worth following.

We should be asking this question instead of OP's question. You really need a statistical significant sample size to know if you have an edge.

It took me hundreds of trades and six months to determine that mechanically selling calls is not the road to riches.