What a long losing streak looks like mathematically

[Shadow Trader]

A strategy that wins 55 percent of the time feels dependable. The statistics say that a run of 7 or 8 losses in a row is not unusual across a few hundred trades.

Here is a rough feel for it. At 55 percent win rate, the chance of losing any given trade is 45 percent. The chance of 5 losses in a row at some point during 300 trades is more than 70 percent. Eight in a row appears roughly once in a few hundred trades as well.

If each loss risks 1 percent, a streak of 8 means an 8 percent drawdown from variance alone, with nothing wrong in the strategy.

Traders who have not seen this ahead of time often assume the system broke, change parameters and destroy a working edge. Those who have run a simulation know that the streak was expected.

A free exercise is to simulate 1,000 trades in a spreadsheet using the strategy's real win rate and see the worst streak. That number belongs in the trading plan.

What was the longest losing streak recorded in the journal, and did it match what the math would predict?