The Losing Series is a kind of toned-down Martingale strategy. After a series of losing trades (how many losers in a row is a variable you decide on), you start to increase your trade size by an incremental number of units every time you make another losing trade (you also get to decide how many units you are going to increase your trade size by).

The losing series strategy is based on the assumption that no losing streak can last for ever, and after a certain number of consecutive losing trades you start to increase your position size as you await the inevitable change of fortune. (Be careful not to fall for the gambler's fallacy though, the coin doesn't know it should start landing heads after many tail tosses, and the lotto numbers don't know when it is their turn either).

Like the Martingale strategy, it is important to use this strategy only on trading systems that tend to generate larger wins than losses. It ensures that after a bad streak you will be ready and taking big bets so the end of your bad luck will coincide with your largest trade size yet.

Of course, it would be more prudent for you to set a ceiling on the number of contracts or the dollar size of each trade, hopefully this limit should not be the maximum your broker will let you have on margin, you should always be mindful of overtrading, even when using strategies like this.

Once you have a winning trade, you should keep that position size going until you have a losing trade, when you have your first losing trade you reset your trade size to your starting default.

For example, if you had three losing trades in a row with two contracts being traded, you may then decide to trade three contracts on the fourth trade, then four contracts on the fifth trade if the forth was a loss, and then five, six, seven, etc, until you achieve a winner. You then keep going with however many contracts as you had on your first win until you make a loss, then you only open two contracts for your next trade, raising that amount after several losers...

If your system has shown a historical tendency to produce a number of consecutive winners and losers, hopefully not a long series of losers but at least a few consecutive winners, this may be a suitable system to use. In particular, some strategies tend to lead to very large gains immediately following a series of losses (an example being contrarian or counter-trend plays), so a losing series system can work for this type of trading.

Like the Martingale strategy a Losing Series trader must be very well capitalised and prepared to deal with substantial drawdowns. It produces linear growth in position size as opposed to the exponential growth of the Martingale.