Another myth — number of losing trades in a row.

Many consider one of the most important factors in the trading system — number of losing trades in a row. Type, if a, for example, 7 consecutive losing trades, then this is very bad and such a system cannot be played psychologically. But when 2-3 убыточных сделок подряд, then this is normal and the system is not bad.

You can just destroy this myth on the fly., giving an example of sequences, for example, such (plus it's a profitable deal, minus — Losing)

1) –+–+–+–+–+–+–+–+–+–+–+–+–+–+–+–+– – everything here 2 убыточных сделки подряд, but as a result of the withdrawal of the deposit
2) +++++++——-+++++++——-+++++++——-+++++++- – здесь же, as much as whole 7 убыточных сделок подряд, but the deposit is safe

They say that the maximum drawdown depends on the number of losing trades in a row. My answer is that they do not have to be in a row. For example, let in the first case be 20 unprofitable almost in a row, but three profitable ones accidentally wedged in between them and it already turns out that there were only six unprofitable ones in a row. And in the second, for example, 10 unprofitable in a row, and then 10 прибыльных. And despite the fact that in the second case, the number of losing trades in a row was higher, drawdown will be much larger in the first case.

Various combinations of pluses and minuses are possible in which a system with a large number of losing trades in a row will be more profitable than a system with a smaller number. Well, it should be noted that in the above examples, conditionally, a profitable and a losing trade are equal in monetary terms. And then what to talk about, for example, трендовых системах, where a profitable trade is several times larger than a losing one and profitable positions are held much longer than unprofitable ones. For example, there are five profitable positions in the traded portfolio system, who increase their profits every day, and at this time twenty attempts to open new positions were unsuccessful and quickly closed with a small loss. That is, it will be reflected in the system as 20 consecutive losing trades. Horrible. Although at that time there was not even a drawdown of the account, because 20 small losses were offset by 5 open positions, increasing their profits. And then do not care about these 20 убыточных сделок подряд.

  Trading ideas on 14 October

Much more important and more objective than the number of losing trades in a row, is such a parameter as the period of time to exit the drawdown, or, otherwise I say, the time it takes to reach the new high equity of the system. This, really, objective parameter, affecting both the equity of the system and the psychology of the speculator, playing this trading system.

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