Reviewing Process Over Outcomes
During Losing Streaks
Learn why reviewing whether your process was followed matters more than focusing on outcomes alone during a losing streak.
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This lesson revisits an important principle from the Trading Essentials module's trade review lesson — separating process from outcome — applying it specifically to the context of a losing streak.
This lesson connects directly to the trading journal unit covered earlier in this module.
Recap: Process vs Outcome
As covered in the Trading Essentials module, a trade that was well-planned and followed established criteria can still result in a loss, since markets involve inherent uncertainty, while a poorly planned trade could still happen to result in a profit. Reviewing whether the plan was followed is generally considered more valuable than focusing solely on the financial outcome.
Why This Distinction Matters Especially During Losing Streaks
During a losing streak, it can be tempting to assume that a string of losses automatically means something is wrong with the underlying approach. However, using the trading journal (covered in the previous unit) to review whether entry criteria, exit criteria, and risk limits were actually followed consistently across the losing trades provides a more accurate picture than the outcomes alone.
Two Different Scenarios Requiring Different Responses
If journal review reveals that the trading plan was followed consistently throughout the losing streak, this may simply reflect the statistical nature of win rates (covered in the trade expectancy lesson earlier in this module), rather than a flawed approach. If, however, review reveals that entry or exit criteria were frequently not followed, or that risk levels drifted during the streak, this points to a different issue — one connected to trading plan discipline rather than the underlying strategy itself.
Why This Distinction Guides Appropriate Next Steps
Correctly identifying which of these two scenarios applies is important, since the appropriate response differs: a consistently followed plan experiencing a statistically normal losing streak may call for patience and continued discipline, while a plan that wasn't followed consistently calls for renewed focus on entry/exit criteria and risk discipline, rather than necessarily changing the underlying strategy itself.
🔖 Summary
Reviewing whether a trading plan was actually followed — using journal data on entry reason, exit reason, and risk taken — provides a more accurate picture during a losing streak than focusing on outcomes alone, since a well-followed plan can still experience losses due to normal market uncertainty. Correctly distinguishing between a statistically normal losing streak and a plan-discipline issue guides which response is actually appropriate.
Frequently Asked Questions
Why review process rather than just outcomes during a losing streak?
A well-planned trade can still lose due to market uncertainty, so reviewing whether the plan was actually followed provides a more accurate picture than outcomes alone.
What does it mean if the plan was followed consistently during a losing streak?
This may simply reflect the statistical nature of win rates rather than a flawed approach, connecting to the trade expectancy concept covered earlier in this module.
What does it mean if entry or exit criteria weren't followed consistently?
This points to a trading plan discipline issue, calling for renewed focus on criteria and risk discipline, rather than necessarily changing the underlying strategy.
How does the trading journal support this kind of review?
It provides the recorded entry reason, exit reason, and risk taken data needed to actually verify whether the plan was followed, rather than relying on memory or assumption.
Risk Warning
Trading forex and CFDs involves significant risk and may not be suitable for all investors. You may lose all of your invested capital. Please ensure you fully understand the risks before trading.
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