Losing streaks happen to every futures trader. However, Variance drives trading performance and influences the way traders think and act. Variance means account volatility, and it describes how the outcome of your trades impact your account development.
In trading, results can’t be forecasted, and you will never know when you enter a winning or losing streak, or how long it will last once you are in it. Therefore, understanding variance and how wrong assumptions can lead to significant underperformance is of great importance to traders.
The gambler’s fallacy describes a phenomenon when people misjudge the likelihood of events. If something happened more frequently than you’d expect it to happen under normal circumstances, people then mistakenly believe it’s going to happen less often in the near future.
For example, if you play roulette and red come up four times in a row,