science_trader is right, that 1% means your 9 losses in a row can happen on average once every hundred trades. thats pretty often I would've thought. also that assumes an even distribution which trading systems rarely exhibit. you refer to losing streaks but streaks actually refer to a situation where series of losers (or winners) are regularly a greater length than would be expected, or happen more frequently than would be expected (if random). You can only suspect that 9 losers in a row is unexpected for your system if it happens twice in 100 trades. but really you will need a lot more trades than that.
When you have a losing streak, it's because you are doing something wrong. Most of the time it's either (a) chasing too late with too tight of stop, or (b) your bias is wrong.
You realize of course with the numbers you posted you have no expectancy of a profit over time. E = (1.5 * .4) - (1.0 * .6) E = .6 - .6 or 0 If you trade this system out over 500 trades you'll also see 12 losers in a row at some time with a greater than 99% certainty. Seems time to get back to work and build a better mousetrap.
Hmmmm....how did you arrive at this figure? Thanks all for your input, keep it coming. Do you guys tweak your systems so as to avoid losing streaks? Whats the longest streaks you guys experienced? How do you know to continue trading or give up? Hmmmm...how do you improve the quality of your signals? I mostly do currencies like the Euro. Since I use tight stops, one area where chain losers are likely is during tight whipsaw ranges. Any idea how to filter those? I don't mind missing good trades, i'll rather not experience another 9-in-a-row losing streak.
Some of you guys must have frikkin great edges if 12 losers in a row is enough to make you rework your systems. Must be nice. 12 is not that rare for me. I don't like it, but I deal with it by using small positions. It won't wipe me out.