Streaks and drawdowns are probability, not bad luck
Even when wins and losses arrive in random order, losing streaks are guaranteed to show up. At exactly a 50% win rate, 100 trades give a ~81% chance of a 5-loss streak or longer, ~32% for 7+, and ~4% for 10+. At a 40% win rate, 7+ losses in a row has ~69% odds and 10+ about 21%.
What the simulator does
- For each trade it draws win or loss using your win rate. A win changes equity by risk % × average win (R); a loss by risk % × average loss (R), compounded.
- It repeats this thousands of times to get the distribution of final equity, max drawdown and longest streak.
- The table at the bottom uses an exact recurrence for streak probability — a formula, not a simulation.
Reading the results
- If expectancy is zero or negative, time works against you. A low win rate can still be positive if the average win is large.
- The 95th-percentile drawdown is the depth you could face on an unlucky path. Whether you can live with that depth should set your risk per trade.
- If the chance of ending in a loss is high, don't trade more — fix the expectancy or the risk size first.
Limits
It assumes independent trades with a constant win rate and payoff. Real markets shift regimes and people break rules after a streak, so live results can be worse. This is a tool for sizing risk, not for forecasting profit.
FAQ
Does a high win rate prevent losing streaks?
No. At a 60% win rate, 100 trades still have about a 46% chance of a 5-loss streak or longer.
What is R?
The amount you lose on one losing trade (your stop) is 1R. An average win of 1.5R means you make 1.5 times your stop amount.
What risk per trade should I use?
There is no single answer; 0.5–2% is common. Check that the 95th-percentile drawdown here is one you can actually sit through.
Why do results change between runs?
Run again uses a new random seed. The same seed reproduces the same result.