8.1Risk Comes First
- ·Why positive expectancy still produces losing streaks
- ·What survival means mathematically
- ·Why risk precedes opportunity
A trading strategy can have a positive expectancy and still experience losing streaks.
Therefore the trader must survive those losing streaks.
Risk first. Opportunity second.
A strategy with a 55% win rate will still produce sequences of five or more consecutive losses across a large sample.
Examples use historical or illustrative data only. They are not live market signals.
Calculate what a run of six consecutive losses would do to your account at your current risk per trade.
A profitable strategy avoids losing streaks.
The primary purpose of risk management is:
- 01Losing streaks are unavoidable.
- 02Survival is a prerequisite for edge.
- 03Risk is assessed before opportunity.
Educational content only. Nothing here is financial advice or a recommendation to trade. Trading involves risk of loss, results vary between individuals, and past performance does not indicate future results. Only capital you can afford to lose should be exposed to market risk.