Here's a number that trips up almost everyone who chases the highest win rate: a strategy can win 65% of its trades and still hand you a 30% drawdown on a $10,000 account.

That's not a broken system. That's variance doing exactly what variance does.

Run the streak math. At a 35% loss rate, five losses in a row is about one in 180 — so if you take 180 trades a quarter, expect that streak every quarter. Six in a row shows up over a year. The edge doesn't stop the streak. It only decides how fast you recover afterward.

Now the part that actually matters: position size.

Same 65% win rate, same edge. At 2% risk per trade, the typical worst drawdown on a thousand simulated paths lands around 10–15%. Survivable. At 5% risk, those same streaks carve out 25–30%. At 10% risk, a normal six-loss streak compounds you down roughly 47% — and now you need to nearly double your money just to get back to even.

Same strategy. The only thing that changed was size.

Here's the line I keep coming back to: your win rate decides whether you make money; your position size decides whether you're still around to collect it.

What a disciplined trader does: size from the worst realistic streak, not the average trade. Ask, "If I lose six in a row — and I will — do I still have an account and a clear head?" Fix that size before you fall in love with the setup, so the exciting trade and the boring trade get the same rules.

Risk of ruin is a path problem, not an average problem. A positive edge doesn't save you if the path runs you off the cliff first.

This is educational commentary, not personalized financial advice — treat these numbers as a model to think with, not a recommendation.

Full walkthrough, with the equity curves drawn on screen: https://youtu.be/mle5BTnBT8Q

— Paragon Signals