Losing Streak Calculator
The Math Behind the Pain
Why your 70% win rate strategy will still lose 10 times in a row. Calculate the probability of consecutive losses and set realistic expectations for your drawdown.
Losing Streak Probability Calculator
Your strategy's historical win rate
How many trades you plan to take
| Consecutive Losses | Single Streak Probability | Chance in 100 Trades |
|---|---|---|
| 3 losses in a row | 6.40% | 99.8% |
| 4 losses in a row | 2.56% | 91.9% |
| 5 losses in a row | 1.02% | 62.8% |
| 6 losses in a row | 0.41% | 32.3% |
| 7 losses in a row | 0.16% | 14.3% |
| 8 losses in a row | 0.07% | 5.9% |
| 9 losses in a row | 0.03% | 2.4% |
| 10 losses in a row | 0.01% | 0.9% |
Formula: P(at least one streak of length k in n trades) ≈ 1 - (1 - loss_ratek)(n-k+1) —Mathematical derivation
The Problem: Why Perfect Backtests Fail
The Problem
- ✕"I optimized my strategy to avoid losses" — You curve-fit to the past, not the future.
- ✕"My backtest never showed 8 losses in a row" — Small sample sizes hide likely outcomes.
- ✕"After 5 losses, a win is due" — This is the Gambler's Fallacy (Tversky & Kahneman, 1971).
The Solution
- ✓Accept mathematical reality — Streaks are inevitable, not bad luck.
- ✓Use Monte Carlo simulations — Test 1,000+ possible futures, not just one past.
- ✓Diversify with uncorrelated strategies — The only mathematical way to reduce streaks (Markowitz, 1952).
Stop guessing. Run Monte Carlo simulations on your actual trade data.
Calculator vs Real Analysis
| Feature | Excel / Manual | BacktestBase |
|---|---|---|
| Streak Calculation | Static formula (theoretical) | Historical analysis (actual) |
| Drawdown Visualization | Hard to graph | Instant interactive charts |
| Monte Carlo Simulation | Complex VBA coding | One-click, 1,000+ runs |
| Portfolio Impact | Impossible to model | See how diversification kills streaks |
| Time to Analyze | Hours per strategy | 30 seconds upload |
Want More Than Theoretical Probabilities?
Upload your TradingView backtest to see your actual historical losing streaks and run Monte Carlo simulations that stress-test your strategy against 1,000+ possible futures.
The Formula for Ruin
If you have a 50% win rate, every trade is essentially a coin flip. Getting 5 tails in a row seems rare (about 3% for any specific sequence). But flip that coin 100 times, and a streak of 5 becomes almost certain (96%+ probability).
The Law of Small Numbers —Tversky & Kahneman (1971) demonstrated that humans incorrectly expect short random sequences to "look random." We expect alternation, not streaks. But in reality, streaks are exactly what randomness produces.
Key Terms
- Risk of Ruin
- The mathematical probability that you will lose enough capital to be unable to continue trading. It depends on win rate, risk-reward ratio, and percentage risked per trade. The Kelly Criterion (Kelly, 1956) provides optimal position sizing to minimize ruin risk.
- Gambler's Fallacy
- The mistaken belief that after a streak of losses, a win becomes more likely. Each trade is independent — previous outcomes don't affect future probabilities. Research confirms this bias increases with streak length.
- Serial Correlation
- In real markets, losses often cluster together due to regime changes and volatility clustering. Cont (2007) documented that market returns exhibit "volatility clustering" — bad days lead to more bad days.
Frequently Asked Questions
How accurate is this calculator?
It is mathematically precise for independent events (each trade outcome unaffected by previous trades). However, real markets exhibit "serial correlation" — bad days often lead to more bad days. Research by Cont (2007) documents this "volatility clustering," so your actual losing streaks may be even worse than theoretical.
How do I reduce my losing streaks?
You cannot "fix" probability — streaks are mathematically inevitable. You can only (1) increase your win rate, which is difficult, or (2) diversify your portfolio with uncorrelated strategies. Modern Portfolio Theory (Markowitz, 1952) proves that combining uncorrelated assets is the only mathematical way to smooth out volatility.
Does BacktestBase calculate this automatically?
Yes — for individual strategies. When you upload a TradingView export, we analyze your historical trades to find your actual maximum winning and losing streaks. Our Monte Carlo stress testing runs 1,000+ simulations to predict drawdown scenarios, helping you understand how your strategy might perform under different market conditions.
What is the Gambler's Fallacy?
The Gambler's Fallacy is the mistaken belief that after a streak of losses, a win becomes "due." Tversky and Kahneman (1971) demonstrated this cognitive bias in their landmark research on the "Law of Small Numbers." In trading, this leads to dangerous behavior like increasing position size after losses.
What is Risk of Ruin?
Risk of Ruin is the mathematical probability that you will lose enough capital to be unable to continue trading. It depends on your win rate, risk-reward ratio, and percentage risked per trade. The Kelly Criterion (Kelly, 1956) provides a formula for optimal position sizing that minimizes risk of ruin while maximizing long-term growth.
Don't Let a Streak Wipe You Out
Upload your backtest to see if your account can survive the "inevitable" streak. Get actual historical analysis and Monte Carlo simulations — free tier available.
Continue Learning
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Common errors that invalidate backtest results and lead to live trading failures.
12 min read →Monte Carlo Stress Testing
The reality check every trading strategy needs before going live.
15 min read →Why Single Strategies Fail
The mathematical proof for portfolio diversification across strategies.
10 min read →BacktestBase is an educational and analytical tool only. Past performance does not guarantee future results. Probability calculations assume independent events; real market conditions may differ due to serial correlation and regime changes. This is not financial advice.