Trend Following & Consecutive Losses And Draw Downs

Most traders and those new to trend following have no idea that trend following is simply playing probabilities…They expect to have trades work from the onset. However when they have consecutive loses or losing streak most amateur traders either give up or try a different trading strategy. They bop from strategy to strategy and lose more money. If you know to expect consecutive losses then you will be more likely to handle those losses.

As Ed Seykota has stated the only way to avoid draw downs or losses is not trade. When one tries to avoid losses he complicates his methodology ( if he has one). The way to accept loses is to take into consideration low risk per trade. This way makes losses more palatable or accepting.

Put into greater context, in trend following most trades only work 35% of the time or slightly better. However as they say ( Jerry Parker famous turtle trend follower) ” One trade can pay for them all”

Accept your losses in trend following…