Hey hey, what's up my friend!

So, you’ve learned about the head and shoulders pattern.

It’s bearish.

You’ve watched three YouTube videos on it, and now you’re scanning the charts for it.

A few days later...

There it is! Left shoulder. Head. Right shoulder. Time to short, baby!

So, you go short.

The market collapses lower and BOOM, you’re in profit.

You lean back in your chair, arms behind your head, thinking to yourself...

"Damn. I've cracked the code. This is too easy."

A week later, you spot another head and shoulders. Even prettier than the first. Like a supermodel head and shoulders. Symmetrical. Glorious. You go short again.

And this time?

You're already mentally upgrading your car, your watch, and your personality.

But the market doesn’t collapse. It rallies. And rallies. Then it takes out your stop loss like it has a personal grudge against you.

Now you’re wondering…

“Wait a minute, it’s the same pattern. What just happened!?”

Here's the uncomfortable truth nobody tells you:

You don't actually know if the pattern works. You have exactly two data points. One winner. One loser. That's not an edge. That's a coin flip with extra steps.

That’s why you must have data. The kind that tells you:

• How the strategy has performed over the last 20 years, not just last Tuesday.
• Its strengths and weaknesses, meaning which market conditions it thrives in and where it struggles.
• The drawdown you can expect from it (which means how much pain you must endure before seeing better days ahead).

That last one matters more than you think.

If you know a strategy has historically gone through a 20% drawdown, a losing streak doesn’t feel like the end of the world.

It’s like knowing my kids will throw a tantrum before bedtime. Still annoying, but I don’t panic and call the doctor.

So before you risk a single cent on any strategy, ask yourself...

"Do I know the data behind it?"

Cheers,

Rayner “the-data-driven-trader” Teo

P.S. If you want trading systems that are already backed by 20+ years of hard data, grab a copy of Trading Systems That Work.