Two definitions in use
- Count-based: maximum number of consecutive losing trades (e.g., 7 losses in a row).
- Dollar-based: maximum cumulative loss across a run of consecutive losers (e.g., -8.4% across 5 trades).
Both matter. A strategy that rarely exceeds 3 consecutive losses is psychologically easier to live with than one where 10+ consecutive losses are normal, even if max DD is identical.
Why it predicts account abandonment
Most account failures are not from a single catastrophic loss but from traders abandoning a valid strategy during its worst streak. Publishing the worst streak alongside max DD gives deployers a more honest expectation of what they will experience.