Does opening a trade during a streak impact your performance?

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Does opening a trade during a streak impact your performance?

Posted by Marise Gaughan on Thursday, August 1, 2024 Under: Technical Analysis

Streaks

Written by Marise Gaughan

Updated over a week ago

The trades you enter after being in a losing streak or a winning streak are often very different to the trades you make when neutral.

Winning streaks can cause us to be overconfidence and make rash decisions, ignoring obvious red flags because we over-inflate our skills and intuition.

Losing streaks can cause the loss aversion bias to come into effect, where we put more weight on avoiding a loss than getting a win, causing erratic and revengeful trading.

Both streaks can cause us to make decisions based on emotion, which can sometimes be a positive, but often emotion trading has a negative impact on your P&L.

In these charts you can examine your trading performance when you are in a winning streak, a losing streak, and neutral.

If losing streaks are an issue for you, add a break into your day if you have a run of losses. Similarly, if winning streaks cause you to give all your winners back, look to your environment and change your approach to trading after a few winning trades. Again it may be as simple as a break, or to stop trading for the remainder of the day.

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