Scalping equity curves are lumpy and the streaks are normal
Posted: Sat Oct 31, 2026 8:23 pm
Many traders expect a steady upward line. Real scalping results look rougher than that, even for profitable systems.
A strategy with a 55 percent win rate and equal payoffs regularly produces runs of seven or eight losses. A string of ten has a meaningful chance over a few thousand trades. Without knowing that, a normal drawdown feels like proof that something broke.
Simulating the system with random sequences of wins and losses, using the actual win rate and payoff, gives a picture of what to expect. Plot a hundred equity curves and the spread is striking.
That helps in two ways. It sets realistic expectations for drawdown depth and duration, and it provides a threshold for when behaviour falls outside the normal range, which would suggest a real change.
Without it, traders either abandon good systems too early or cling to broken ones.
A Monte Carlo test takes a few minutes in a spreadsheet.
What is the worst drawdown your system has had, relative to what simulation predicted?
A strategy with a 55 percent win rate and equal payoffs regularly produces runs of seven or eight losses. A string of ten has a meaningful chance over a few thousand trades. Without knowing that, a normal drawdown feels like proof that something broke.
Simulating the system with random sequences of wins and losses, using the actual win rate and payoff, gives a picture of what to expect. Plot a hundred equity curves and the spread is striking.
That helps in two ways. It sets realistic expectations for drawdown depth and duration, and it provides a threshold for when behaviour falls outside the normal range, which would suggest a real change.
Without it, traders either abandon good systems too early or cling to broken ones.
A Monte Carlo test takes a few minutes in a spreadsheet.
What is the worst drawdown your system has had, relative to what simulation predicted?