Contrarian trading

[tomkat22]

Why may I ask?

I guess I've gotten less patient as the years have gone by.Plus that bear market in 2022 and subsequent choppiness wreaked havoc with my system.

 

[Aisone]

Thanks for sharing.

Actually I was sharing my recent day trading experience: Counter trend and contrarian day trading did not work for me whereas strict trend following seemed to work.

On the other hand, I traded options for over a decade and the only thing that worked was contrarian, though low probability, they produced very high rewards when right, enough to provide me with a very good CAGR.

Take care.

I started trading index options, and while I sold a ton of them in those days, it wasn't my money. But that's where the counter trading started. However once trading stocks on my own, I never looked back, as the idea of self-managing options positions and greeks had no appeal compared to the 1->1 delta of stocks and futures etc.

 

[stonedinvestor]

Never said I was 'so good' (or so bad), but all in all it's a good question and actually one that I've thought about often. However there are lots of reasons:



Contrarian thought is the number one way to stay ahead in the market. Use it for market timing.

Predicting reversal points on stocks is more about vol analysis.

What you might consider is Behavioral Value-- which is when a stock is royally flushed and everyone throws in the towel (Penguins- in the old days) that is often a great time to buy. ~stoney

 

[Aisone]

Contrarian thought is the number one way to stay ahead in the market. Use it for market timing.

Predicting reversal points on stocks is more about vol analysis.

What you might consider is Behavioral Value-- which is when a stock is royally flushed and everyone throws in the towel (Penguins- in the old days) that is often a great time to buy. ~stoney

I very much agree with the exception of volume, which I've never considered in making trades.