Most traders, even those who are decently skilled, are taking far more risk than they realize. Nasty losing streaks are out there, and odds are that your career-worst sequential losing streak is still yet to come. Moreover, actual comfortable drawdown levels tend to be about half of what people say they are. In your case, I think the lesson is that 1% risk per trade is too much. I still size most of my trades to a 1% max risk level, but actual losses are almost always less than 50 basis points and virtually never more than 60 unless I get caught in a gap.
I completely agree, 1% risk per trade is too much if you can not handle a losing streak. Everyone will have at least one in their career, if you crack under the pressure you will make mistakes and as a result blow your account. I am currently taking 0,5% risk per trade with my stock trading strategy, currently i have 20 open positions so that would be 10%, however my portfolio is very diversified and both long and short, so it is almost impossible that all of those trades are going to be losers.
1% per portfolio/total capital or per position ? Let's imagine that total capital is $ 1 000. Theres 10, uncorelated (low BETA) positions/bets, each representing $ 100 in your portfolio. RRR 1 to 3 at least. (1 to 4 - even better & if you do swings, that can go up to 1 to 10 or more) Max loss allowed per position - 5%, which represents 0.5% of total capital. So your stops ain't too tight & you have to be 20 times wrong, before reaching - 10% hole. And even 10% is no big deal. Author of the book ,,The Way of Turtles", used to get 70% drawndowns, still flipped 100k to 4 mils in 10 years. One of the few tho.(sorry if i made a mistake on those numbers)
Out of the past 2000 trades, there were ten occasions where I lost 7-10 in a row. The majority of losing streaks were 3-4. My risk is an average of 1.3% per trade. Frustrating losing streaks, euphoric winning streaks, and a whole lot of neither. That's trading (for me).
Well, the first time I was doing one lots in 1993, using overnight margin on futures as which I would trade, took me 6 months to lose and I was doing up to 6 month holding periods including rollovers on profitable trades, risking back then $200, so was down approx. $4900 on $25k account and on 24th and 25th trade, made it all back. The 2nd time of 23 in a row losses, I had graduated to very long term holding in commodities/futures of years sometimes, graduated to experienced regarding Hedging, that year I actually had a few long periods of number in a row losses on futures side, but on the options side was profitable, for the year I was profitable on futures side of 5% of my trades and options side was profitable 92% to cover losses plus little more. Long term, I am the "yahoo" that will eventually find highs/lows or percentage of nine year cycles and do counter trend on original entries seeking to gain 50-75% of 9 year cycle, once found the extremes, then when world says trend has changed, I go counter again to add to original entries, countless rollovers, enough times of addons from 3 to 16. So profits can snowball. System is always early, been shorting Indexes for 2.5 years, always hedged but seldom Hedged in usually manners, have to think outside the bun. My risk of Hedge to futures is always no worse than zero at time of entry, but due to "time" aspects as back testing shows me over staying new entries not at breakeven stops yet, works against position. If lose on futures but market then turns around, that is where losses achieved. "How did I feel?" I am not like "normal" humans, having Asperser's, don't have understanding of many of the negative emotions, I understand love and life, not despair or anger, I don't think in terms of right and wrong or me against anyone, I love the challenge of me against me. I do get frustrated at myself when I have gone against my systems, but in different ways than all the rest, maybe not, who knows. I use to get very frustrated of not understanding people, but have come to terms of being in my 60s, so now it is more of "fu*k'em and feed them peanuts" for "they" should be at zoos. Exactly. I never get euphoric winning streaks, don't understand happiness but a sense of applied the correct moves. Now all automated, but always trying to make hedges in different ways which has lead to viewing options in different ways as well.
I don't track the usual trading metrics like winner/loser streaks, win rate, winner:loser ratios etc. Once you have a consistent strategy, knowing these things will just play games with your mentality. I track £ net profit and % net profit per month. One thing I can say since moving over to scalping forex is that if I reach a point where aggregated loss for the day at any point is -3r (r being the standard capital risk per trade), my strategy won't go into profit from there before the close. So I just stop trading for the day and that way at least my daily loss is capped.
Yes, at a loss of -2r during the day I would keep going. Results so far say that a smaller loss during the session can often be re-couped but a loss of -3r cannot be won back that day. So -3r is the red light: I keep going until I hit the red light. 'Course I would love to hone it down to -2r or but that will take more experience with the strategy. I'll post it up if it changes.