Is It a Drawdown or Is Your Strategy Broken?

August 19, 2026 6 Min Read

Six losses in a row. The system has not changed. You have followed it.

And now you have to answer the hardest question in trading: is this normal, or has my edge stopped working?

Get it wrong in one direction and you abandon a profitable system during ordinary variance. Get it wrong in the other and you keep funding something that has genuinely stopped working. Most traders resolve this by feel, which reliably produces the first error, because six losses in a row feels catastrophic while being completely routine.

Here is how to answer it with arithmetic instead.

First: what a normal losing streak looks like

Most traders have no idea how common long losing streaks are in a perfectly healthy system.

With a 40% win rate, the probability of six consecutive losses is 0.6⁶, which is about 4.7%. That sounds rare until you consider how many six-trade sequences occur in a year. Take 300 trades and you should expect multiple six-loss streaks, and a run of nine or ten is entirely possible without anything being wrong.

Rough guide to the longest streak you should expect across 200 to 300 trades:

Win rate	Expect a losing streak of
60%	6 to 7
50%	8 to 9
40%	10 to 12
30%	14 to 17

Look at your win rate and find your number. If your current streak is below it, you have learned something important: nothing unusual is happening.

This is why high-R, low-win-rate systems are so hard to run. A 3R system winning 35% of the time is excellent and will regularly hand you eight losses in a row. Most traders abandon it around loss five.

The four questions

Work through these in order. The order matters, because question one disqualifies most cases before you get to the harder analysis.

Question 1: Did you actually follow the system?

Pull the last twenty trades. For each one, mark whether it met every condition of your written criteria, and whether the exit was the planned exit.

If your compliance rate is under 80%, stop here. You have not tested your strategy. You have tested a mixture of your strategy and your improvisation, and the result tells you nothing about the strategy.

This is where most “my strategy stopped working” cases actually end. The strategy is intact and execution drifted, usually gradually, usually without any single moment that felt like a decision.

You cannot proceed to question two until this is clean.

Question 2: Is the sample large enough to mean anything?

Six trades tell you nothing. Twenty trades tell you very little. You need 30 at absolute minimum before the numbers carry information, and 100 before you should feel confident.

If your losing streak is inside the expected range from the table and your sample is under 30, the honest answer is that you do not yet have enough data to have a problem. Keep executing at reduced size and reassess.

Question 3: Which number actually changed?

This is the diagnostic step, and it is the one that produces real answers.

Split your trade history into two periods: when it worked, and now. Compare four numbers:

Win rate.
Average R on winners.
Average R on losers.
Number of setups appearing per week.

Each pattern points somewhere different:

What changed	What it usually means
Win rate fell, average winner unchanged	Conditions changed. Your setup fires less accurately in this regime. Usually recovers.
Win rate unchanged, average winner shrank	Execution. You are cutting winners early. Not a strategy problem.
Average loser grew	Execution. Stops are being moved or ignored. Not a strategy problem.
Setups per week collapsed	The market environment no longer produces your pattern. Wait, do not force.
Everything degraded together	Either a genuine regime change or your compliance is worse than you scored it.

Notice how many rows say execution. In practice, most strategies that “stopped working” have an unchanged win rate and a shrunken average winner. The entries are still finding what they always found. The exits changed.

Question 4: Has the market regime actually changed?

Only reach this after the first three are clean.

Systems are regime-dependent. A trend-following setup will struggle in a range. A mean-reversion setup will get destroyed in a strong trend. Neither is broken. Both are out of season.

Check whether the conditions your system needs are present. Is volatility much higher or lower than during the period it worked? Is the index trending or ranging? Did something structural change, such as expiry-day rules or lot sizes?

If your system needs trends and there have been no trends for six weeks, you have your answer, and the answer is not to change the system.

What to do while you are uncertain

You do not have to choose between full size and quitting. There is a middle option, and it is almost always the right one.

Cut size to a quarter and keep executing.

This solves the actual problem, which is that you need more data and cannot afford to gather it at full risk. At quarter size you continue collecting the sample, the losses stay small, and the emotional pressure drops enough that you stop making things worse.

Set a review point in advance: 30 more trades, or four weeks, whichever comes first. Then look at the numbers again rather than at how you feel.

What not to do:

Do not modify the system mid-drawdown. Changes made under pressure are almost always curve-fitted to the last few losses.
Do not increase size to recover faster. This is revenge trading with a strategy justification attached.
Do not switch to a new system. You will arrive at its first drawdown with no baseline data and repeat this exact process from a worse starting point.

When it genuinely is broken

Some edges do die. The honest signals:

Compliance above 90% across the sample.
50 or more trades in the current period.
Win rate has fallen well outside its historical range, not just below average.
A structural change explains it: a rule change, a liquidity change, or the inefficiency you were exploiting has been arbitraged away.
The degradation persists across multiple market regimes rather than one.

All five, not two. If all five are true, retire the strategy without drama. That is a normal event and not a failure.

Frequently asked questions

How many losing trades before I should worry?

Compare against your win rate rather than using a fixed number. At a 40% win rate, ten consecutive losses is within normal range across a few hundred trades. At 60%, seven would be unusual. The number is meaningless without the win rate.

How large a drawdown is normal?

Depends on your risk per trade. Risking 1% per trade with a ten-loss streak produces roughly a 10% drawdown, which is entirely ordinary. If a normal losing streak would put your account in serious trouble, the problem is position size, not the strategy.

Should I paper trade during a drawdown?

Reduced live size beats paper trading, because paper trading removes the emotional conditions you are trying to test under. A quarter size keeps the psychology real while making the cost small.

My strategy worked in backtest but not live. Which is this?

Usually neither a drawdown nor a broken strategy, but an execution gap. Compare your live trades against what the system said to do. If the live version has a lower average winner or a higher average loser, the difference is you, not the edge. This is by far the most common case.

How do I stop panicking during a losing streak?

Know your expected worst streak before it happens. Calculate it from your win rate and write it on your plan. A trader who knows to expect ten consecutive losses handles the seventh very differently from one who thought four was a lot.

The bottom line

Most strategies that “stop working” were never tested, because compliance was never measured. Check that first and the majority of these questions answer themselves.

If compliance is clean, look at which number moved. The answer is usually in the exits, not the entries.

And know your expected losing streak before you are in one. It is the difference between a routine week and a decision you regret.

Har losing streak strategy ki galti nahi hoti. Zyadatar execution ki hoti hai.

Related reading:

Want a second opinion on your numbers? I run a free live session twice a week for traders with two or more years of experience who know the setups but still cannot execute under pressure. Register for the next free session here.

I am Samir Dash, founder of Mindful Trading Hub. I work with experienced traders on live market decision-making. More about my story here.

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