Can Perpetual Contrarians Profit As Traders?
A perpetual contrarian is usually synonymous with a broke contrarian. With regards to trends...how do you know if your higher low or lower low is not just random Brownian motion? Most chart patterns have no forecasting ability at all. Can you tell what is driving price now from historical data? The short answer is no.
Having a macro view of why prices are moving will help you. Following the ideas above will not. Your chances of success are basically zero if your believe what you have written above.
It is the same idea as thinking that if you are trading against a loser EA , you will win. You will not. It is not just signals that a trader has to trade
Can not. Too limited : the key is adapting to market (when necessary) not trading some system like it is a faith not a system
There are some very successful hedge funds that use contrarian strategies, but they are not easy to implement and they use a mix of technical and fundamental analysis. The basis of it is to buy low and sell high, and in order to do that, you must buy when everyone else is selling. not easy though.
There are some very successful hedge funds that use contrarian strategies, but they are not easy to implement and they use a mix of technical and fundamental analysis. The basis of it is to buy low and sell high, and in order to do that, you must buy when everyone else is selling. not easy though.
Most of the big time traders which also include the Hedge funds are looking for such trading opportunities using which they have leverage their risks and in turn get some opportunity where they will be able to earn good profits in their trades 
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
You agree to website policy and terms of use
Some among us are perpetual contrarians. When the market is going up, they think it should be heading down before long. When the market is going down, they think it should go up soon. However, for each transaction there must be a buyer and a seller, so one party is always a contrarian based on the prevailing trend. The question becomes whether or not it's possible to make money while always believing the market will reverse its course.
Tutorial: Technical Analysis
The short answer is yes, but it requires an understanding of three things: that opinion and action are two different things, that trends are where the money is and that price confirmation is needed for any reversal.
Opinion and Action Are Different Things
If you find that your natural tendency is to be a contrarian, you must realize that there can and should be a difference between opinion and action. If the market is rising and you feel it will eventually collapse, you don't need to act on that opinion right now. Opinion can be separated from what is currently going on – this will allow you to profit by trading with the market right now, instead of believing your opinion should be right at this time.
For more on indicators that contrarians monitor, check out Why is the disparity index indicator important to contrarian investors?
Opinion and emotion can wreak havoc on trading profitability, especially when traders develop very strong opinions or emotions. This is where it becomes imperative to design a trading plan before you start trading. This will allow you to act in a way that is aligned with your trading methods despite opinion or emotion. Trading on opinion can be very costly - the market can be "wrong" a lot longer than a trader can afford to be "right." A trader can design such a trading plan any way they wish, whether by trading with the trend, or watching for high probability reversal points. The key is that contrarians must not act only on opinion, but must take other factors such as actual price movement into account.
Trade With the Trend Even if You Don't Believe It
The development of trends is what allows the majority of traders to make money over time. A contrarian can trade in the direction of a trend, even if he or she feels it will reverse at some point. A trend will always reverse simply because prices do not move in one direction forever.
But just because a trader has an opinion about what the market will do, doesn't mean he or she has to act on it. Trading with the trend will allow the trader to capitalize on market moves while they are occurring instead of always waiting for a reversal. While markets do reverse, trends can last for a long time, even in the face of information that indicates otherwise. Since most individual traders can enter and exit the market with relative ease to due to their position sizes, trading against current price movements does not need to occur. (For more, see Keep It Simple – Trade With The Trend.)
An uptrend is defined as higher highs and higher lows, while a downtrend is defined as lower highs and lower lows. Therefore, all traders have a guide as to when trends are present. A trader can draw lines on a chart, called trendlines, along the price lows and price highs to give themselves a visual representation of the current trend. The current direction of the trend is where trades should be placed. When the trend actually appears to be in jeopardy based on price action, then the trader can begin looking for reversal trades that fit their contrarian view.
Trends occur on multiple time frames, therefore it is also important that a trader have a time frame for any given trade. For example, a one-minute time frame would not provide the relevant trend information for a long-term investor, just as a weekly chart is unlikely to help a day trader move in and out of positions. Analyzing multiple time frames can aid all traders in finding high-probability entry and exit points. For example, a pullback on a smaller time frame can often provide a valid entry for a longer term trend. (To learn more about this strategy, check out Multiple Time Frames Can Multiply Returns.)