Handling Drawdowns & Losing Streaks Strategies
In financial trading, **a losing streak (Drawdown)** is 100% certain to happen to any trading system, including large investment funds. The difference between a professional trader and an amateur trader is how they **treat their accounts and control their psychology** when this losing streak appears.
1. Rules for Proactive Risk Scaling Down (Risk Scaling Down)
When your account falls into a drawdown period, trying to increase trading volume to "even the score" is suicidal. Instead, do the opposite:
📉 Decline step 1 (Account negative 3%):
Immediately reduce the risk size of each order from 1% to **0.5%** or 0.25%. The goal now is to keep the account from further losses, not to quickly equalize.
🚨 Decline step 2 (Account negative 5%):
Completely suspend trading for **3 days**. Turn off the computer, stay away from the market to purify your mind, completely cut off the flow of bitter emotions and take revenge on the market.
2. Account Restoration Process and Confidence
Step 1: Review losing orders See if it's a system error (normal) or because you broke discipline (entered FOMO orders, moved SL haphazardly). If it is a disciplinary error, seriously correct it.
Step 2: Return to Forward Test or trade a very small account. When you have 2 - 3 consecutive winning orders (even if the amount is very small), the brain will restore confidence and the inherent feeling of victory.
Step 3: Only increase the risk size again to 1% when the account balance has officially returned to the original breakeven point.
Trade disciplined and trade well! If you have any questions about this lesson, join our Telegram community to discuss.
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