Roundup: Getting back from a drawdown, step-downs, step-ups and what counts as normal
Posted: Tue Oct 13, 2026 10:05 am
Roundup: Getting back from a drawdown, step-downs, step-ups and what counts as normal
There's a good set of drawdown threads on this board, from the template style to the "I'm in one right now" style. Together they make a fairly complete protocol, and they mostly agree, so here it is.
First, is it actually a problem?
The losing month thread and the losing streaks thread both start here. With a 55 percent win rate, five losses in a row in any particular stretch of five trades is about 1.8 percent likely. Over 500 trades, a streak of 6 to 8 is very likely to appear at least once. So size for the longest streak you can expect, not the average, and compare the current drawdown with what your testing and journal predict. If it's inside that range, it's probably variance.
A reply in the recovery plan thread adds a check that's easy to skip: what was the market doing? A strategy that needs movement will bleed during a low volatility stretch, which is a different problem from you breaking rules. The breakeven stretch thread found exactly that by comparing daily ATR against previous months, and pointed out that a run of scratches is still a small loss each after spread and commission.
Step down mechanically
Every thread here agrees on cutting size, and on deciding the trigger in advance. Variants:
Step back up with criteria, not feelings
The graduated return thread has the line that matters most: without step-up criteria written down, half risk lasts about two winning trades before impatience pushes it back up. Write the condition, like a number of clean trades or a recovered share of the drawdown, before you need it.
The same thread notes half size has a side benefit. With less pressure, rule-following improves quickly, which helps you see whether the problem was the strategy or you.
Protect the plan from yourself
Two small rules from the recovery plan thread: put the plan somewhere you'll actually see it during a drawdown, like a sticky note on the monitor, and don't edit it while you're in the drawdown. Edits only happen at a new high.
The live version
The red week thread was written mid-drawdown, down about 1.8 percent through Thursday from small losers and a couple of rule breaks. Size was halved for the rest of the week, not as punishment but because the read on the market clearly wasn't good. It's useful because it shows the protocol is just as boring in real time as on paper.
The one place the threads differ is the trigger: percent from peak, weekly loss, or equity curve average. Any of them works if it's written down first.
What's your step-up rule after cutting size, and have you ever broken it early?
Threads this pulls from
There's a good set of drawdown threads on this board, from the template style to the "I'm in one right now" style. Together they make a fairly complete protocol, and they mostly agree, so here it is.
First, is it actually a problem?
The losing month thread and the losing streaks thread both start here. With a 55 percent win rate, five losses in a row in any particular stretch of five trades is about 1.8 percent likely. Over 500 trades, a streak of 6 to 8 is very likely to appear at least once. So size for the longest streak you can expect, not the average, and compare the current drawdown with what your testing and journal predict. If it's inside that range, it's probably variance.
A reply in the recovery plan thread adds a check that's easy to skip: what was the market doing? A strategy that needs movement will bleed during a low volatility stretch, which is a different problem from you breaking rules. The breakeven stretch thread found exactly that by comparing daily ATR against previous months, and pointed out that a run of scratches is still a small loss each after spread and commission.
Step down mechanically
Every thread here agrees on cutting size, and on deciding the trigger in advance. Variants:
- Tiered: down 5 percent from peak, review the last 20 trades and cut risk 25 percent. Down 10 percent, cut 50 percent, and so on.
- The cold week step-down: define a cold week in advance, roughly a 2 to 3 percent weekly drawdown or a week where process scores collapse, then halve size automatically.
- Equity curve rule: a 20-trade moving average of the equity curve, and half risk whenever the curve is below it.
Step back up with criteria, not feelings
The graduated return thread has the line that matters most: without step-up criteria written down, half risk lasts about two winning trades before impatience pushes it back up. Write the condition, like a number of clean trades or a recovered share of the drawdown, before you need it.
The same thread notes half size has a side benefit. With less pressure, rule-following improves quickly, which helps you see whether the problem was the strategy or you.
Protect the plan from yourself
Two small rules from the recovery plan thread: put the plan somewhere you'll actually see it during a drawdown, like a sticky note on the monitor, and don't edit it while you're in the drawdown. Edits only happen at a new high.
The live version
The red week thread was written mid-drawdown, down about 1.8 percent through Thursday from small losers and a couple of rule breaks. Size was halved for the rest of the week, not as punishment but because the read on the market clearly wasn't good. It's useful because it shows the protocol is just as boring in real time as on paper.
The one place the threads differ is the trigger: percent from peak, weekly loss, or equity curve average. Any of them works if it's written down first.
What's your step-up rule after cutting size, and have you ever broken it early?
Threads this pulls from
- A Drawdown Recovery Plan You Can Write Today
- Drawdown recovery without revenge: the 50% size step-down I use after a cold week
- Resetting Risk After a Drawdown: A Graduated Return
- Handling a Losing Month Without Breaking Your System
- Psychology during a red week: what do you do?
- Equity Curve Rules, Trade Smaller When You're Out of Sync
- Losing Streaks: What to Expect From a 55% Win-Rate Strategy
- A stretch of breakeven trades and how I stopped forcing it