How Ty Rajnus Returned 382% Short Selling in the 2025 US Investing Championship

Ty Rajnus of Rajnus Capital finished second in the 2025 US Investing Championship with a 382% return, zero losing months, and a 66% win rate across 238 trades. Every single one was a short. Here’s how a potato farmer’s grandson built a systematic short-selling machine from a camp trailer in Reno.

From Potato Farms to the Short Side

Ty Rajnus didn’t come from a trading background. His family are potato farmers. He got his start in the markets with a $2,000 gift from his grandfather, and what followed was a path that looked nothing like the typical retail trader’s journey.

Rajnus enrolled in engineering school, but the pull of the markets proved stronger. He dropped out to trade full-time, living out of a camp trailer while he refined his process. No cushion. No fallback. Just a small account, a laptop, and an obsession with building something that worked.

What makes Rajnus unusual isn’t just that he trades exclusively on the short side. It’s that he treats trading like an engineering problem. He doesn’t rely on gut instinct or pattern recognition learned from years of screen time. He built a fully systematic approach, rooted in backtesting, that removes the emotional decision-making most traders struggle with.

Why Short Selling (and Only Short Selling)

Most traders start on the long side and stay there. The few who venture into short selling typically treat it as a secondary tool during bear markets. Rajnus flipped that entire model. He trades short and only short, regardless of the broader market environment.

His reasoning is straightforward. The nano-cap and micro-cap space, where he operates, is filled with stocks that run on hype, dilution, and low liquidity. These stocks don’t need a bear market to collapse. They do it on their own, often violently, once the catalyst that drove them higher fades or the underlying company dilutes shareholders to raise cash.

By specializing in one direction, Rajnus avoids the cognitive switching cost that comes with toggling between long and short setups. He doesn’t need to assess whether the market is bullish or bearish. His universe of trades exists independently of the S&P 500. This kind of specialization mirrors what other US Investing Championship winners have done on the long side: go deep in one niche rather than broad across many.

The System: Backtesting First, Trading Second

Rajnus comes from an engineering mindset, and it shows. Before he risks a dollar on a trade, the setup has to survive rigorous backtesting. This isn’t casual chart review. It’s systematic data collection and analysis across hundreds or thousands of historical examples.

The core philosophy: if a setup can’t prove it has an edge in historical data, it doesn’t get traded. Period. This approach removes the most dangerous element in trading, which is the trader’s own emotions. When you’ve already tested a strategy across years of data, you don’t panic when a trade goes against you. You’ve already seen that scenario in the backtest.

This is a lesson that applies to traders on both sides of the market. Whether you’re building a trading system for swing trading breakouts or shorting overextended micro-caps, the principle is the same. A system you’ve validated with data is a system you can actually follow under pressure.

Rajnus collects his own data, builds his own models, and runs his own tests. He doesn’t outsource any part of the process. This DIY approach means he understands every assumption baked into his strategy, which is critical when market conditions shift and he needs to diagnose whether his edge is still intact.

Where the Edge Lives: Dilution, Parabolic Action, and Liquidity

Rajnus’s strategy targets three key characteristics in the stocks he shorts. Each one represents a structural weakness that creates predictable downside.

The combination of all three creates a high-probability setup. A nano-cap stock that has gone parabolic, is likely to dilute, and is seeing volume dry up is essentially a ticking clock. Rajnus’s backtesting tells him when that clock tends to run out.

For context, traders on the long side use similar structural thinking when identifying asymmetric return opportunities. The idea is the same: find setups where the risk/reward is skewed in your favor because of underlying market mechanics, not just a line on a chart.

Risk Management for Short Sellers

Short selling carries unique risks that long-side traders never face. When you buy a stock, the most you can lose is 100% of your position. When you short a stock, losses are theoretically unlimited. A $2 micro-cap can run to $20 in a single session if the right catalyst hits. This asymmetry makes position sizing the most important variable in any short seller’s toolkit.

Rajnus handles this through what he calls backtested max drawdown sizing. Instead of using a fixed percentage of his account per trade, he sizes each position based on the worst-case scenario his backtesting has revealed for that specific setup type. If his data shows that a particular pattern has historically produced a maximum adverse excursion of X%, he sizes the position so that an X% move against him keeps total account risk within acceptable bounds.

This approach to risk is conceptually similar to what Mark Minervini demonstrated in his championship run, where disciplined risk control was the foundation that made everything else possible. The specifics differ (Minervini trades long, uses tight stops, and accepts a lower win rate), but the principle is identical: size your positions so that your worst-case scenarios don’t take you out of the game.

Rajnus’s zero losing months in 2025 weren’t the result of never being wrong. He was wrong on 34% of his trades. But his sizing ensured that the winners, when they hit, overwhelmed the losers by a wide enough margin to keep every single month in the green.

The 2025 USIC Results in Context

The 2025 US Investing Championship was one of the most competitive years in the event’s history, with 579 international competitors. In the stock division (accounts between $20,000 and $1,000,000), Martin Luk from Hong Kong took first with an astonishing 969.8% return, a new world record for the stock division.

Rajnus’s 382% for second place would have won the championship outright in most prior years. For perspective, Mark Minervini’s championship-winning return in 2021 was 334%. What makes Rajnus’s result especially notable is that he achieved it exclusively through short selling in what was, by most measures, a strong year for equities.

The consistency of Rajnus’s returns across multiple years separates him from traders who might spike in a single favorable year. His three consecutive years of 200%+ returns suggest the edge is systematic and repeatable, which is exactly what you’d expect from a backtesting-driven approach. When J Law shared lessons from his championship run, he emphasized that sustainable performance comes from a process you can repeat, not from heroic individual trades. Rajnus embodies that same philosophy, just from the opposite side of the market.

What Long-Side Traders Can Learn from a Short Seller

Even if you never short a stock in your life, Rajnus’s approach holds lessons that apply to any trading style.

Build from First Principles

Rajnus didn’t copy someone else’s strategy and tweak it. He started with a question (what makes micro-cap stocks go down?), collected data, and built a system from scratch. This first-principles approach is what separates traders who understand their edge from traders who are simply following rules they don’t fully grasp. If you’re building a trading system, start with the “why” before the “how.”

Specialize Ruthlessly

Rajnus doesn’t swing trade. He doesn’t buy dips. He doesn’t trade options. He day trades nano-cap and micro-cap shorts. That’s it. This level of specialization lets him go deeper than any generalist ever could. The same principle holds for long-side traders. The ones who produce the best results tend to be the ones who master one approach rather than dabbling in five.

Let Data Remove Emotion

The biggest takeaway from Rajnus’s process is that trading psychology becomes far less of a problem when you’ve done the work upfront. If your strategy is backtested and you trust the data, you don’t need to wrestle with fear and greed on every trade. The data has already answered the questions your emotions are asking. As Marios Stamatoudis has written, solving the trading equation starts with building a foundation you actually believe in.

Size for Survival

Rajnus’s max-drawdown-based sizing ensures he stays in the game through adverse periods. This is a universal principle. Whether you’re risking 0.25% per trade like a momentum swing trader or sizing based on backtested drawdowns like Rajnus, the goal is the same: make sure no single trade or losing streak can take you out of the game before your edge has time to compound.

Consistency Beats Heroics

Zero losing months across a full calendar year sounds almost too good to be true. But it’s the natural result of a system with a positive expectancy executed with disciplined sizing. Rajnus didn’t have a single month where he swung for the fences and hit a grand slam. He had twelve months where his system did what the backtest said it would do. Consistent routines and execution are what turn an edge into actual returns.