Rayner Teo

If trading is 80% psychology, why aren't monks rich? If trading is about discipline, soldiers would rule Wall Street. If risk management alone worked, no one would blow up their account. So clearly, something is missing... And here's what most "experts" won't tell you... Discipline is the last thing you should work on. I know. Every trading guru and their grandmother says: "You must be disciplined!" I can relate. When I first started trading, I thought discipline was my problem. I started with Bollinger Bands, and the first few trades were winners. I thought to myself... "I'm going to retire by 30, buy a villa, and have a swimming pool." Now, I'm almost 40. No villa. No pool. And I have 3 monkeys running around my house. Then… I encountered 5 losses in a row, and panic set in. I thought the strategy no longer works, so I tried to find something better. I tried things like volume spread analysis, chart patterns, harmonic patterns, etc. But the only pattern I see is my trading account going down. So, what did I do? I told myself... "You need more discipline!" "You need to control your emotions!" "You need to follow your rules!" It didn't work. Because here's the thing... You can't be disciplined about something you don't trust. Think about it... Imagine you have a magic coin. When you toss it, and it comes up heads, you win $2. When you toss it, and it comes up tails, you lose $1. Now let me ask you... Will you struggle with discipline when tossing this coin? Will you abandon the coin after 5 losses? Will you need a therapist to help you manage your emotions? Of course not! You'd flip that coin all day. During breakfast. During lunch. During dinner. And even while peeing, you'd be flipping the coin with one hand. (Don't ask what the other hand is doing.) Now, why didn’t you have discipline problems with this coin? Because you know the odds are in your favour. You don't need motivation. You don't need a trading journal filled with affirmations. You don't need to meditate for 30 minutes before your trading session. You just flip the damn coin. Now... Compare this to most traders. You use a strategy found on some random YouTube video. You’ve never backtested it. You have no idea if it works over 1,000 trades. And then you wonder why you can't follow the rules after 3 losses in a row. Clearly… You don't have a discipline problem. You have a strategy problem. When you have a proven strategy that works, something shifts inside you. You gain conviction. You gain confidence. You follow the rules not because you're "disciplined" but because you know the math is on your side.

The market is like university. First year? You’re confused. Second year? You think you know everything. Third year? You realise you know nothing. Fourth year? Now we’re talking.

He turned $40,000 into over $20 million. Won the 1984 U.S. Investing Championship. And across the many trading contests he entered, he averaged 210% returns. Not bad for a guy who lost money for 10 years straight. This is the story of Marty Schwartz… Now, Marty wasn't your average guy. He had an MBA from Columbia and was a securities analyst at E.F. Hutton, flying around America, researching companies for a living. (In other words, he was the kind of guy who used words like "EBITDA" at dinner parties and wondered why no one laughed.) In his free time, Marty traded part-time. And lost money. Consistently. For 10 whole years. You're probably thinking: “If he's so smart, why is he losing?" Here's why… Marty is an analyst, and he’s paid to be right. You know, study a company, form a view, and defend it. So when the market disagreed with him, he didn't cut. He argued with the market. (It's like arguing with my wife. I can present all the facts, all the evidence, all the logic in the world… And I still lose.) After 10 years, he realised something had to change. So, he quit. He walked away from being an analyst, bought a seat on the exchange, and started over as a technician. No thesis to protect. Just price. So here are 3 trading rules that shaped his trading... 1. Follow the 10-day moving average. If the price is above the 10-day moving average, look for buying opportunities. If the price is below the 10-day moving average, look for shorting opportunities (or stay in cash). The idea is to trade when momentum is behind your back, and not against it. 2. Cut your losses fast. Even the best traders will encounter losses. The key is to cut your losses so you still have “chips” to continue playing the game. 3. Ignore fundamentals Fundamentals are useful to tell you which stocks are “good”. But it doesn’t tell you when exactly to buy or sell. That’s when technical analysis comes into play. The outcome? Marty Schwartz turned $40,000 into over $20 million and won the 1984 U.S. Investing Championship. He didn't find a better way to be right. He built a way to be wrong cheaply. Same guy. Same brain. Same market. The only thing that changed is that he stopped needing the market to agree with him.

Jesse Livermore made $100 million during the 1929 crash. Then he lost everything. Not because his strategy stopped working. Not because the markets changed. But because he made one mistake that destroyed even the best traders. Here’s his story… They called him the Boy Plunger. He started trading at 14, and eventually, the bucket shops banned him because he kept taking their money. In 1907, when the market panicked, he shorted it and made a fortune in a single day. In 1929, as the world fell into depression, he reportedly walked away with around $100 million. Adjusted for inflation, that's more money than I could spend in ten lifetimes, even if I buy a Lambo for every lifetime. And gave one to my wife. And one to each kid. And one for my mother-in-law (God help me). This man could read the tape better than anyone alive. His edge was real. Not luck. At the same time… He filed for bankruptcy in 1915. He rebuilt. He filed again in 1934. He rebuilt again. And eventually, he took his own life. You're probably thinking: ● "His strategy stopped working." ● "The markets changed." ● "He got unlucky." Nope. Nope. And nope. His edge was never the problem. What he lacked was risk management. Livermore bet big. When he was convinced, he loaded up. And when he was right, it was glorious. But being right 6 times out of 10 doesn't save you when the other 4 take everything. In other words, you can have the best trading strategy in the world. But without risk management, you can’t keep any of the profits. So here are a few risk management tips for you… 1. Watch your total exposure. Five trades in five oil stocks is one trade wearing a disguise. If oil collapses, all five go down together, and your "diversified" portfolio cries in unison. 2. Never increase your size because you feel certain This one is dangerous. Because the more certain you feel, the more you bet. And the more you bet, the more it hurts when you're wrong. Feeling certain is exactly what bankrupted Livermore. Twice. 3. Know the probability and the magnitude Before you place a trade, ask yourself two things: How likely am I to lose? And if I lose, how much will I lose? Then decide if the trade is actually worth it.

AI will not make you a profitable trader. Here's why. AI learns from the internet. And when it comes to trading, it’s mostly junk. Written by people who turned $500 into a Lamborghini and never survived a losing streak. So when the machine learns from all that, what do you think comes out? Grammatically perfect junk. It's the oldest rule in computing. Garbage in, garbage out. Feed a machine a mountain of bad trading advice, ask it for a system, and it'll happily blend all that garbage into a smoothie and hand it to you with a smile. That’s why most trading systems given by AI don’t work. So where does AI fit? After you have an edge. Not before. An edge is a trading system that genuinely makes money over hundreds of trades, backed by real data. Not vibes. Not a hot streak. Not something ChatGPT cooked up at 2 am because you asked nicely. Once you have an edge, a proven system that actually works, then you bring in the AI. Use it to automate the boring parts. Scanning hundreds of markets for your setups. Running the rules without emotion. That's the right order. Edge first. Automation second. Get it backwards, and all you've built is a very fast, very expensive way to lose money while you sleep. So if you're sitting there without a proven edge, no amount of AI prompting will save you. If you want to fix that first, grab my free training where I walk you through 3 proven trading strategies backed by real data. Details in my bio. Get the edge first. Then let the robot do the heavy lifting.

Passing a prop firm challenge is one of the most dangerous things that can happen to a trader. Because it convinces you that you've made it. You can hit the target, get the capital, and feel unstoppable. A few weeks later, the account is gone. Daily drawdown limit hit. Rule breached. Game over. And you're sitting there confused, because you passed, didn't you? You did the exact thing they asked you to do. You even printed the certificate (and it’s now hiding in a drawer). Here’s the deal: Passing the challenge and being a profitable trader are two completely different games. Like how passing your driving test and being a good driver are two completely different things. (Ask my wife. She passed on the first attempt. God help us all on the road.) The challenge tests one thing: can you hit a profit target without breaking the rules? And you can do that... by getting lucky. Size up, catch a hot streak, sneak past the line. It feels like a skill. But a lot of the time, it's just a coin flip that happened to land your way. Let me explain… Imagine you flip a coin. Heads you win, tails you lose. You flip it five times and get four heads. Are you a genius coin flipper now? Of course not. You just had a good run. Flip it a few hundred more times and reality shows up. A trading challenge is the same. A few good weeks can carry you across the finish line. It says nothing about whether you'll still be standing after a hundred trades. Because the market doesn't care that you passed. The next month, it asks you the only question that's ever mattered... Do you have an edge? An edge is something you do over and over that makes money in the long run—like the casino that doesn't sweat one spin of the wheel, because it knows the math works over thousands of them. That's what lets you survive a losing streak without panicking. That's what lets you follow your rules when the account is bleeding. A prop firm can hand you capital. A slick dashboard. A payout structure. What it cannot hand you is a system that makes money from hundreds of trades. So before you pay for your next challenge, ask yourself one honest question: If I traded my own small account with these exact rules for the next 100 trades... would I come out ahead? If you can't answer yes with a straight face, the funding was never your problem. The edge was.

What if I told you that one of the greatest traders in history made money while being wrong most of the time? His name is Ed Seykota. And back in the 1970s, when everyone else was squinting at ticker tape and shouting across trading floors, this MIT grad did something nobody understood. He coded one of the first computerised trend-following systems and let it trade for him. The result? He turned $5,000 into roughly $15 million over about 12 years. Around 60% a year. But here's the thing... He didn't do it by predicting the market. He didn't catch tops. He didn't catch bottoms. He did 3 things that make most traders feel uncomfortable. 1. Ride the trend. Don't fight it. The trend is your friend. Stop trying to be the genius who calls the exact reversal. Catching a falling knife feels smart. Following a trend feels dumb and obvious. But one of them pays the bills, and it's not the clever one. 2. Cut your losses fast. Small losses are just the cost of doing business. When the system says you're wrong, you're out. No hoping. No "it'll come back." No averaging down because you've fallen in love with a position. You take the small loss and move on, like ripping off a plaster. 3. Let your winners run. This is the brutal one. Every instinct in your body wants to grab a small profit and feel safe, then you watch the big move take off without you, like a bus you missed by ten seconds. Trend following forces you to hold. Because here's the math that makes the whole thing work... You only need a few huge winners to pay for all your small losers. That's it. That's the secret. You can be wrong 6 times out of 10 and still get rich, as long as the winners are big and the losers are small. Now... Notice how every single one of those rules fights your emotions? Riding the trend means ignoring the urge to outsmart it. Cutting losses means swallowing your ego. Letting winners run means resisting the itch to grab and run. Your feelings will sabotage all three. Every time. In the heat of the moment, fear and greed grab the wheel, and they are terrible traders. That's exactly why you need a system. Not to predict the future, nobody can do that. But to keep you in the winners and out of the losers long enough for the math to actually work.

@RondoFx I feel like an old man now. Cheers

Do you know @Rayner_Teo If you know this guy as a trader, you’ve been in the game for sometime. God bless that nigga! I learnt the four phases of the market before I came about ICT.

Amateur traders ask: "How much can I make from trading?" Professional traders ask: "How do I survive the next 1000 trades?" A big difference.

Discipline without an edge just means you'll lose consistently.

Here’s my trading result for this year… YTD return: 21.33% All-time return: 400.65% In March, the stock market declined 10%, and this triggered an exit for most of my stock positions. It turned out to be a false breakdown as the market rallied 17% of the lows. Ouch! Because of this rally, my trading system is bullish again, and needed to buy the stocks I sold earlier, albeit at a much higher price. As you can tell, this isn’t the easiest thing to do because I seem like an idiot who sold at the lows and bought back at the highs. But there’s a reason for this madness. Here’s why… I moved to cash in March because I don’t know if the market will collapse further. If it did, I would look like a genius who avoided a blood bath. However, it turned out to be a false breakdown, and I ended up selling low and buying high. But here’s the thing… You can’t judge the quality of a decision after the outcome. Instead, the quality of a decision is based on the information you have available and using it to the best of your ability. It's like going on a date. You dress nicely, bring flowers, and show up on time. If she turns out to be crazy, that doesn't mean your preparation was bad—you just got unlucky with the outcome. Now this isn’t the first time it has happened, and it will happen again. However, it’s the price I’m willing to pay because I know this: If I take care of my downside, the upside will take care of itself. That’s how I’m able to beat the markets consistently over the last 7 years. Not because I'm smart. Not because I can predict the future. But because I protect my downside and let the maths do the heavy lifting.

Most traders don’t fail because they’re lazy. They fail because nobody tells them what’s ACTUALLY wrong. Instead, you hear things like... “Work on your mindset.” “Be more disciplined.” “Control your emotions.” That’s like telling a drowning person... “Try swimming harder.” I know because I spent years making the exact same mistakes. So here are the 3 mistakes that kept me (and probably you) from being profitable... 𝐌𝐢𝐬𝐭𝐚𝐤𝐞 #𝟏: 𝐍𝐨 𝐩𝐫𝐨𝐯𝐞𝐧 𝐬𝐭𝐫𝐚𝐭𝐞𝐠𝐲 Most traders are using strategies they found on a random YouTube video. You’ve never backtested it. You’ve no idea if it works over 100 or 1,000 trades. You’re gambling, but with fancier charts. It's like following a recipe from a stranger on the internet who says... "Trust me, bro, put ketchup on your ice cream. It's amazing!" You try it. It's disgusting. And you wonder why dinner is ruined. So here’s the deal… If you don't have a proven strategy, you can't trust your system. And if you can't trust your system, everything else falls apart. 𝐌𝐢𝐬𝐭𝐚𝐤𝐞 #𝟐: 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐲 𝐡𝐨𝐩𝐩𝐢𝐧𝐠 This one hits close to home because I was the king of strategy hopping. My first trading strategy was using Bollinger Bands, and I had a few winning trades in a row. I thought to myself... "I'm going to retire by 30, buy a villa, and have a swimming pool." Now, I'm almost 40. No villa. No pool. And I have 3 monkeys running around my house. Then… I encountered 5 losses in a row, and panic set in. I thought the strategy no longer works, so I tried to find something better. I tried things like volume spread analysis, chart patterns, harmonic patterns, etc. But the only pattern I see is my trading account going down. Here's why this is so deadly... Every time you switch strategies, you reset. You never give any single system enough trades for the edge to play out. It's like planting a seed, digging it up after 3 days to check if it's growing, then planting a different seed. Nothing will ever grow. 𝐌𝐢𝐬𝐭𝐚𝐤𝐞 #𝟑: 𝐄𝐦𝐨𝐭𝐢𝐨𝐧𝐬 After 5 losses in a row, something snaps. You have thoughts like… "The market is out to get me!" "How dare you take my money!" "I'll show you who's boss!" So you double down to make back what you've lost—and you lose even more. Now here's what most traders don't realise... All 3 of these mistakes? They're symptoms. Not the cause. It's like when you forget your anniversary and your wife says... "Don't touch me." "Go away." "We need to talk." Those are the symptoms. Forgetting the anniversary is the cause. In trading, the cause behind these symptoms is the same thing... You don't have an edge. Without an edge, you can't trust your system. Without trust, you can't follow the rules. Without following the rules, emotions take over.

You can't follow your trading rules, not because you’re lazy. But because deep down, you don't trust them.

@_cecili_a It is! They're a bundle of joy!

@Rayner_Teo Lool Now, I'm almost 40. No villa. No pool. And I have 3 monkeys running around my house. Bet it’s better than the original plan

If trading is 80% psychology, why aren't monks rich? If trading is about discipline, soldiers would rule Wall Street. If risk management alone worked, no one would blow up their account. So clearly, something is missing... And here's what most "experts" won't tell you... Discipline is the last thing you should work on. I know. Every trading guru and their grandmother says: "You must be disciplined!" I can relate. When I first started trading, I thought discipline was my problem. I started with Bollinger Bands, and the first few trades were winners. I thought to myself... "I'm going to retire by 30, buy a villa, and have a swimming pool." Now, I'm almost 40. No villa. No pool. And I have 3 monkeys running around my house. Then… I encountered 5 losses in a row, and panic set in. I thought the strategy no longer works, so I tried to find something better. I tried things like volume spread analysis, chart patterns, harmonic patterns, etc. But the only pattern I see is my trading account going down. So, what did I do? I told myself... "You need more discipline!" "You need to control your emotions!" "You need to follow your rules!" It didn't work. Because here's the thing... You can't be disciplined about something you don't trust. Think about it... Imagine you have a magic coin. When you toss it, and it comes up heads, you win $2. When you toss it, and it comes up tails, you lose $1. Now let me ask you... Will you struggle with discipline when tossing this coin? Will you abandon the coin after 5 losses? Will you need a therapist to help you manage your emotions? Of course not! You'd flip that coin all day. During breakfast. During lunch. During dinner. And even while peeing, you'd be flipping the coin with one hand. (Don't ask what the other hand is doing.) Now, why didn’t you have discipline problems with this coin? Because you know the odds are in your favour. You don't need motivation. You don't need a trading journal filled with affirmations. You don't need to meditate for 30 minutes before your trading session. You just flip the damn coin. Now... Compare this to most traders. You use a strategy found on some random YouTube video. You’ve never backtested it. You have no idea if it works over 1,000 trades. And then you wonder why you can't follow the rules after 3 losses in a row. Clearly… You don't have a discipline problem. You have a strategy problem. When you have a proven strategy that works, something shifts inside you. You gain conviction. You gain confidence. You follow the rules not because you're "disciplined" but because you know the math is on your side.

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Most traders spend their entire careers trying to predict the future. "Which direction will the market go?" "Is this stock going to break out?" "Should I buy or sell?" They read the news. They study the charts. They follow the "experts." And after all that work? They still lose money faster than I lose my hair. Here's what the professionals figured out a long time ago... You don't need to predict anything. Because prices have a dirty little habit. When it moves too far from the average, it’s likely to snap back. This approach is called mean reversion trading. And it's been quietly working in the background while retail traders are busy arguing about MACD settings on Reddit. Here's a way to think about it... Think of a rubber band. The further you stretch it, the stronger the force that wants to snap it back. That's what happens with stock prices. When a stock drops too far, too fast, there's a gravitational pull that tends to bring the price back toward its average. Think of it like your wife's mood when you forget your anniversary. It drops fast, really fast. But eventually, with enough apologies, flowers, and promising to be a better husband (again), it reverts to the mean. The keyword here is "eventually." Sometimes it takes longer than others, and sometimes the flowers need to be more expensive. So why does mean reversion trading work? Well, markets are driven by human emotions. Fear and greed. Always have been. Always will be. When prices fall quickly, traders panic. Weak holders sell. The selling feeds on itself. It's like a stampede. One person runs for the exit, and suddenly everyone's running, even the guy who has no idea what's happening. But more often than not, the selling is exaggerated. It's an overreaction. The fear fades. Rational buyers step in. Price rebounds. Now, you might be wondering… "What if the stock keeps falling?" Great question. And this is where most traders screw up. Not every falling stock is a rubber band ready to snap back. Some rubber bands are broken. A stock that's been declining for 6 months isn't "stretched." That's not a dip, that's a cliff. (Kind of like my hair. It's not "temporarily thinning." It's gone. There's no mean reversion happening up there. My forehead just keeps making new all-time highs, breaking resistance levels I didn’t know existed.) So how do you tell the difference? Here are some guidelines: 1. The stock is in an uptrend. You want to buy when the stock is in an uptrend because the price is likely to continue higher. E.g. the stock is above the 200-day moving average. Think of it like checking if your wife is in a good mood before asking if you can buy another trading course. 2. The stock made a sudden drop over the last few days. This is your pullback signal. The rubber band is stretched. This could be as simple as the 10-day RSI below 30 or the price drops 5% over the last 2 days. 3. Hold for a few days, max. If the stock wants to make a bounce, it should happen fast, usually within 5 days. If not, it’s likely to chop around or worse, continue lower. So hold your trade for a few days, if it doesn’t make a bounce higher, exit. Anyway… If you’d like to learn more about such a trading approach, then join me at Stock Trading Secrets. Details in the comment below.

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@marine_law Following the trend Short term trading strategies that work

Hello @Rayner_Teo Any suggestions on trading books with backtest results for a newbie

@equitywisdom Thank you for sharing. That's another way to diversify that most traders overlook.

Agreed with you. I have lot of respect for you Rayner because my successful technical trading have lot of rules which I have learnt from you. Most traders stop at “don’t reinvent the wheel.” You took it further with data + multiple systems. But if I may add what Livermore & Darvas taught me : “Don’t just trade multiple systems—trade multiple timeframes of the same core truth.” Here’s what I mean: Minervini / O’Neil → contraction & expansion (VCP, cup-with-handle) works on weekly and hourly. Darvas → box theory works on daily and intraday if volume confirms. Magee / Edwards → trend vs. range is universal. The “wheel” isn’t RSI or Bollinger—it’s price behavior + volume + position sizing. You didn’t abandon indicators. You abandoned indicator worship. That’s the real edge. My 2 cents from trading India’s wild market (where wheels break daily): “Reinvent the application, never the principle.” The study and charts which I share are based on principles of Livermore’s pivots, Darvas boxes and Minervini’s VCP - all on Nifty stocks. I believe in old-school principles, new-school execution.

If I could go back in time and tell my younger self ONE thing about trading, it wouldn't be a strategy, an indicator, or a stock pick. It would be this... "Don’t reinvent the wheel." In the past, I was using Bollinger Bands, analysing chart patterns, drawing harmonic patterns, and the only pattern I recognised was my bank account going down (no indicators required). Today... My account is up +343% while the S&P 500 did +118% over the same period. So, what changed? 3 things that made the difference... 𝟏. 𝐃𝐨𝐧'𝐭 𝐫𝐞𝐢𝐧𝐯𝐞𝐧𝐭 𝐭𝐡𝐞 𝐰𝐡𝐞𝐞𝐥 I stopped trying to create the perfect strategy from scratch. Instead, I study what already works. Strategies backed by decades of data. Approaches used by billion-dollar hedge funds. Then, I tweaked them to suit my needs. It's like cooking. You don't need to invent pasta—you just need to make it taste good with your own sauce. 𝟐. 𝐃𝐚𝐭𝐚 𝐠𝐢𝐯𝐞𝐬 𝐲𝐨𝐮 𝐜𝐨𝐧𝐯𝐢𝐜𝐭𝐢𝐨𝐧 Every trader will face a losing streak. Most will panic and abandon their system faster than I abandon my wife when she says, “We need to talk”. But when your trading system is backed by data, it gives you the conviction to continue trading it. You’ve seen the backtest, it’s not the first drawdown, and you’re prepared for it. 𝟑. 𝐌𝐮𝐥𝐭𝐢𝐩𝐥𝐞 𝐭𝐫𝐚𝐝𝐢𝐧𝐠 𝐬𝐲𝐬𝐭𝐞𝐦𝐬 No single trading system works all the time. Trend following crushes it during a crisis but struggles in choppy markets. Mean reversion prints money in a bull market but bleeds during a bear market. The solution? Trade multiple systems. When one is in a drawdown, another is likely making money. It's like having both an umbrella and sunscreen business. No matter what the weather does, you're covered. Here's the bottom line... You don't need to be the smartest in the room. You just need proven strategies, the data to back them up, and enough systems to profit regardless of market conditions.