When you visit any trading community, you will often come across the discussion on losing streak. If you do not know what a losing streak means, it is when a trader is experiencing successive losses over a given period (say a month or several weeks).

Personally, I haven’t encountered a losing streak in my trading journey. Most of my losses occur once in a while (once/twice a week or three times a month). So the first time I came across the word losing streak, I didn’t really understand it and how a trader could be experiencing losses that can run over several weeks. 

In my search to gain a deeper understanding of what this is all about, I came to realize that traders who experience a losing streak possess these two traits.

1. Lack a deeper understanding of the market or trades
2. Use indicators

How to avoid a losing streak

The sad part of the discussion of losing streak is that most traders will tell you that it is part of the game. Comments like these are usually the most common way to convince traders in this situation. 

However, such comments won’t help as they don’t tell you how to get out of such successive losses.

Here’s what traders need to do to avoid going through a losing streak.

1. Find if the market is trending or consolidating

The forex market behaves differently every single day. Even so, you will find that on any particular day, the market is either consolidating or is in a trend. But how the market consolidates or trends is never the same. 

For example, if the market is in a trend, there are days the trend will be super strong, strong, medium, weak, and very weak. Or if it is ranging/consolidating, there are days when it will consolidate with lots of pips (very choppy/huge ranges) or small/narrow pips. Sometimes the momentum will be high or low.

Let’s look at the two examples below. In the first example, we can see that the market was consolidating, but with huge ranges all through the week.

In the next example, the trade started a new bullish trend on the first day of the week, but on the second and third day it consolidated, and later continued with the bullish trend on Thursday and Friday.

This understanding of how the market behaves is what most traders (especially those experiencing a losing streak) lack. So instead of taking a break from trading like what most traders suggest in the comments, read the chart carefully (especially the 4 hr chart) and find what the trade is doing, or rather what is causing the trade to behave differently that is making your strategy not work. As a trader, you need to be pragmatic in how you approach the market and not trade on probabilities.

2. Stay away from indicators

One important thing I learned about indicators is that there are indicators for trending markets and ranging markets. So if you are using an indicator for trending markets, yet the market is consolidating, you will definitely be having a losing streak because your indicator is not designed to work with ranging markets.

Most times your stops will be knocked out by false breakouts since ranging markets have a lot of false breakouts. That is when you start seeing traders lamenting in various Forex groups that for the past few days their strategy is not working. 

A similar case applies when using an indicator for a ranging market in a trending market. Your stop loss will always be hit when the market is in a strong trend.

The problem is that many professional traders just pick indicators and begin using them without knowing what that indicator was developed to do. These are the reasons I stopped using indicators in trading and I have never had a losing streak, only a few onetime losses. It took me a long time to understand this limitation of indicators and fortunately; it has borne a lot of fruits.

Conclusion on losing streak

My advice to traders who want to avoid a losing streak is that they need to understand first what the market/trade is doing before they enter a position. If the market is trending, trade trend and if ranging, trade ranges (keeping in mind areas when a new trend may begin such market opening/closing).

The way to understand the market is to study your trades carefully. Learn to read the chart and what the trade is doing at various times (market opening/closing, news, etc.). With time, you will know what is causing your losing streak and how to avoid it. 

Finally, stay away from indicators as different indicators are designed for different market conditions—they will just mislead you and cloud your judgement.