Losing Streak Calculator
Losing streak odds give the probability of encountering a run of consecutive losses of a given length across a number of trades. Long runs are far more likely than intuition suggests, so a streak is usually weak evidence that anything has changed.
How likely that run was
Defaults look for a run of 6 losses across 100 trades at a hit rate of 55%.
This treats overlapping windows as independent, which they are not, so it slightly overstates the probability for long streaks. It is close enough to make the point and it errs in the direction of expecting streaks, which is the safer error here.
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How the number is built
Three steps. The chance of a run starting at one particular point, the number of points it could start at, and the chance of none of them happening.
Chance = 1 − (1 − qˢ)^(n − s + 1)
where q is the loss rate, s the streak length and n the number of trades.
The exponent is the number of places a run could begin, and it grows with the number of trades. That is why an active trader meets long streaks that an occasional one never does.
A worked example
Take the defaults: a run of 6 losses across 100 trades at a hit rate of 55%.
The loss rate is 45%, so a specific run of six is 0.45⁶ = 0.830%.
There are 100 − 6 + 1 = 95 places it could start.
So the chance of at least one is 1 − (1 − 0.00830)⁹⁵ = 54.71%.
More likely than not. The strategy is winning more often than it loses, and a six-loss run inside a hundred trades is still the expected experience rather than the exception.
Why this feels wrong
People judge a streak by how unlikely it is at one specific point, which is 0.83%. The relevant number is how likely it is anywhere in the sequence, which is 54.71%, and those two differ by a factor of sixty-six.
Lengthen the run and the answer collapses fast. At the same hit rate across 100 trades, a run of 4 is 98.28% likely, a run of 6 is 54.71%, a run of 8 is 14.49% and a run of 10 is 3.05%.
So there is a length beyond which a streak genuinely is informative — it is just considerably longer than the one that makes people abandon a strategy.
What real sequences look like
On this site’s shared series the average direction run is 2.01 bars, measured across 286 runs. Two in a row is the ordinary case, not a pattern.
The longest run in that series was 11. Real markets cluster — conditions persist, so outcomes
persist — which means the independence this formula assumes understates how long real streaks run.
The figures are in research/series-measurements.json.
What a streak actually costs
Six losses at 1% of the account leaves 94.15% of it, needing 6.22% to recover. Six at 3% leaves 83.30%, needing 20.05%. Six at 5% leaves 73.51%, needing 36.04%.
The streak was identical in all three. What differed was the size, which is the only part of this you control.
Costs are paid on every trade in the streak. On this site’s shared series a round trip measures about 2% of the median bar range of 0.493, so a run of six losses is six spreads as well as six losses.
Sizing for the streak you will meet
Turn it around and it becomes a sizing input. Decide the longest run you want the account to absorb comfortably, then choose a risk per trade that leaves the balance somewhere you can still think clearly.
At a 55% hit rate over 100 trades, a run of 8 has a 14.49% chance of appearing. That is not rare, so it is a reasonable number to plan around rather than a worst case to dismiss.
Eight losses at 1% leaves 92.27% of the account and at 4% leaves 72.14%. The first is an inconvenience and the second is the point where most people stop following their own rules, which is the failure that actually ends accounts.
Choose the size that keeps the likely streak boring, because the arithmetic of recovery is easy and the discipline of continuing through a bad run is not.
The original data
Of the 24,971 unique videos in research/search-study-corpus.jsonl, 1 has an instruction-shaped
title about losing-streak odds, at 24 views — the lowest figure anywhere in the tool study. Risk of
ruin appears in 2 at 23,415 and win-rate targets in 161 at 13,711. The counts come from
site/rank_tools2.py.
One video, 24 views. Nobody searches for this before it happens and everybody needs it during, and by then the calculation reads as an excuse rather than as a prior — which is the whole reason to run it early.
The answer to the question above is that six is what this strategy was always going to produce. At a 55% hit rate over a hundred trades it is more likely to happen than not, so it carries almost no information about whether anything changed. The streak that would be informative is around ten, at 3.05% — and even then the honest response is to check whether the process was followed, not to conclude the edge is gone.
When it fails
The independence assumption is the weak point and it fails in the direction that hurts. Market conditions persist for weeks, so a strategy suited to trending markets loses repeatedly through a range — the losses are not independent draws, they are one condition repeated. That makes real streaks both longer and more likely than this calculator reports, and it means a long run can be genuine evidence about conditions even when it is not evidence about the strategy.
The second failure is using it to justify never stopping. Some strategies do break.
A third is ignoring the payoff. A run of small losses matters less than a run of large ones.
A fourth is measuring the hit rate on the same sample as the streak. That is circular.
A fifth is treating the answer as a prediction of when. It says whether, not where.
And a sixth is increasing size to recover. That converts a normal streak into a serious one.
Related
Risk of ruin is what a streak threatens. Expectancy is what survives one. And drawdown is what a streak looks like on the equity curve.
The reason to run this before trading rather than during a bad run is that the number is only useful when it is not personal. Told in advance that six losses in a row is likely inside a hundred trades, you can size for it. Told during the sixth loss, nobody believes it, and that is exactly when the sizing gets changed.
— Michael Whitman
This page is educational, not financial advice. Test every idea on your own charts before risking money.