After a losing streak, what is your rule for going back to full position size?

Every trader has a run of losses. What matters is what happens next: some trade smaller, some stop for a day or a week, some review every trade, and some carry on exactly as before because the losses were within their plan.

After a losing streak, what is your rule for going back to full position size? — risk-reward diagram
A risk-reward ratio of 1 to 2

The risk in each direction is different. Trading smaller after losses can protect an account, but coming back to full size too late can leave a trader stuck in caution. Carrying on as before can be right when the losses are a normal part of the strategy, or wrong when they are a sign that something has changed, such as the market or the trader's discipline. Position sizing covers how to fix risk per trade so that a losing run doesn't do lasting damage, and demo vs live trading explains why emotions change when real money is involved.

After a losing streak, what is your rule for going back to full position size? — drawdown and recovery diagram
An equity curve during a drawdown and its recovery

We would like members to describe their rule, if they have one:

  • How many losses in a row, or what drawdown, triggers a change in how you trade?
  • Do you cut size, pause, move to a demo account, or review your journal first?
  • What has to happen before you go back to full size: a number of trades, a winning trade, a set number of days, or a review of your notes?
  • Did you ever break your own rule during a losing run, and what happened?

If you don't have a rule yet, tell us what you'd like to have. Please keep replies to your own experience. Posts that promise a direction or sell signals will be removed.

Background: Position sizing: how to risk a fixed percentage per trade

How much you trade matters more than where you enter. A step-by-step method for sizing positions from your stop-loss and the amount you are willing to lose.

How do I calculate lot size from risk?

Divide the amount you are willing to lose by the stop distance in pips multiplied by the pip value per lot. For $50 risk, a 25-pip stop and $10 per pip per lot, that is 0.20 lots.

What is the 1% rule in trading?

A guideline to risk no more than 1% of the account on any single trade, so a losing streak doesn't cause a drawdown you can't recover from. It is a starting point, not a guarantee.

Read the full guide

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