Consistency activates the Law of Averages

Winning streaks pass challenges and hit payout targets, we can never know when a win streak will happen, so be prepared for when they come.

Coin Flip Win Streak Example

This is where your psychology with trading will make or break whatever potential you have. You MUST find a way to keep your risk the same with every trade. If you get emotional and double down because you lost the previous trade, you will be destroyed over time.

On the other hand, if you have cold feet from a previous loss and risk less on your next trade and it wins, then you've also contributed to the inconsistency in your trading.

Advantages of Consistent Position Sizing

There are so many advantages to keeping your position sizes relatively the same day after day when trading with prop firms:

Main Reasons

Consistency Rules: Prop firms don't want to see a huge fluctuation in your lot sizes and risk levels. They want to see you stick with the same strategy, or they are likely to reject you as a funded trader.
Accurate Win Rate Data: If you are trading with the same risk amount and TP/SL (risk-reward ratio), then you really get accurate data on how well your strategy and entry model for your trades are working. If everything you do is inconsistent in your trading, how do you know which consistencies are working and which need to be eliminated?
Law of Average Win Streak: If you are trading with a 1:1 to 1:2 risk-reward ratio and your strategy gives you a slight edge, you will see win streaks over and over again, week after week. It is inevitable, so you want to be trading the same way day after day so that when that win streak comes along, you can take full advantage of it.

Don't Sweat Losing Streaks

Don't sweat it if you are on a losing streak. If you are trading prop firm challenges within the risk parameters outlined in this ebook, it will be statistically impossible for you to not be profitable over time.

This is how you win the long game - by using the law of averages, as long as that average proves profitable in a prop firm setting, which mine 100% is.

Every trader, no matter how great, will see drawdowns and losing streaks. The traders that understand probability know that it is only a matter of time until the next win streak brings them back into profitability.

Every trader will fail challenges and breach funded accounts, that’s the nature of the game and it is okay. It is much less about how many times you fail and much more about the times you win and how that translates to overall net profit.

See the coin flip win streak diagram above? Imagine if heads represent a win. Now imagine if flipping a coin heads was weighted in your favor to have a 65% probability to land heads... your win streaks will be next level, along with your pass rate of challenges.

Conclusion

Win streaks pass challenges, so make sure you are trading with the risk you've decided on with every trade because you don't want to miss out on that profit when it's your turn to hit that streak.

📸 The image below shows an example of how coin flips work. As you can see there are winning streaks of 5+ trades. If you were to reduce your position size after losing a few trades in a row, you may miss out on the benefits that upcoming win streak. It’s also important to remember that with a decent strategy, you can increase your winrate of a 1:1 RRR above the 50% blind probability that you would get with a coin flip. This will significantly increase the probability of win streaks over 100 trades.