Drawdown is a certainty, not a failure
A strategy with a 45% win rate will, over a few hundred trades, produce a run of eight or nine consecutive losses. Not might — will. At 1% risk that is a 9% drawdown from normal variance alone, with nothing wrong. The question is not how to avoid it but what you do while inside it.
Measure it from the peak
drawdown % = (equity peak − current equity) ÷ equity peak × 100
Track it from the highest equity the account has reached, not from the starting balance. An account up 30% and then down 15% from there is in a 15% drawdown, and should be treated as one, however green the year looks.
Scale risk down with depth
Fixed-fraction risk already shrinks position size as the account shrinks. Add a second, deliberate step:
| Drawdown from peak | Risk per trade |
|---|---|
| 0 – 5% | 1.0% |
| 5 – 10% | 0.5% |
| 10 – 15% | 0.25% |
| over 15% | stop; review the journal before the next trade |
The point is not the exact numbers. It is that the reduction is automatic — decided before the streak, so the streak does not get a vote.
Do not change the strategy mid-drawdown
The strongest urge in a losing run is to fix something. Nine losses is inside the normal range for most systems; abandoning the system there is how a trader collects the losing streak of every strategy and the winning streak of none. Change the strategy on the evidence of the journal over a large sample, not on the pain of this week.
Recovery arithmetic
A 15% drawdown needs an 18% gain to recover. At the reduced size that takes longer, and that is the trade-off you chose: a slower recovery in exchange for surviving the drawdown that would have been 40% at full size.
Summary
Drawdown is measured from the peak and is a normal output of any edge. Cut risk in steps as it deepens, stop at a pre-set depth, and change the strategy only on data — never on the streak itself.