Do you make this AI trading mistake?

You type into ChatGPT:

"Give me a profitable trading strategy."

The AI delivers. Entry rules, exit rules, position sizing, etc.

So you trade it and lose money.

Then, you tweak the prompt and ask again.

You get a new strategy, new rules, new unshakeable confidence. And you lose again.

Why?

Here's the thing most traders never realise…

AI can absolutely give you the rules. That part is easy. Rules are just words, and AI is very good at words.

But a strategy isn't proven by its rules. It's proven by testing those rules on reliable data. And that's exactly where AI falls flat.

Because good data isn't free.

Clean, institutional-grade historical data costs money.

So when AI "backtests" a strategy, it's testing on data it can't vouch for. Garbage in, garbage out.

That's why almost every strategy AI hands you falls apart the moment real money is on the line. And it's why I'd never trust AI to do the backtesting for me.

Now you’re probably wondering:

"Rayner, are you saying AI is completely useless for trading?"

Nope.

I use it myself. You've got to point it at the right job.

Here's how I use AI for my trading:

Analyse a trading system

Take your developed trading system and ask AI to analyze the strength and weakness of it.

This gives you insights into when your trading system makes money and when it loses, so you can better manage your expectations. This means when a drawdown hits and your brain is screaming "Abandon ship, this thing is broken!", you actually know what's happening and don't do something stupid.

Portfolio analysis

Combine multiple trading systems and ask AI to analyse them as a portfolio. You'll discover which systems secretly do the same thing (correlated risk, bad), which ones complement each other, and how adding a new system changes your overall returns.

This used to require a quant analyst and a large salary. Now it requires a decent prompt and fifteen minutes.

Do you see the difference?

So stop asking it to hand you an edge on a silver platter. Instead, build your edge first, then hand it to AI and say: "Tell me what I'm missing."

You'll be surprised what it can find.

Cheers,

Rayner “don’t-trust-AI-for-everything” Teo

P.S. The edge still has to come from you. AI just helps you sharpen it. Like a knife, it can't cook the meal, but in the right hands, it makes everything easier.

And if you want to make trading easier, then Trading Systems That Work is for you.