Contrarian trading

Aisone said:
I'm thinking a contrarian trader should be right as often as a trend trader or it's probably not a good system of predicting reversals. It can be a very complicated science, and I'm not sure your chart's criteria reflects that.
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If you are so good at contrarian trading, you should be even better at trend following and if so why don't you just trend follow?
 
ironchef said:
If you are so good at contrarian trading, you should be even better at trend following and if so why don't you just trend follow?
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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:

1) Always had instincts for going against the grain trading, nothing for trend following.
2) Have been only counter-trading since I began (long time ago.)
3) Always traded 'worst of the worst' volatility, which can jade someone against holding positions and make that more nerve-racking than higher volatility trading
4) Conditioned addictiveness of quick rewards and taking quick profits (when profitable)
5)All analytics and signals have been built for years for counter-trading, nothing for trend trading
6) Trading (manually) is first and foremost a mental game. All the analytics in the world won't help a manual trader if their mind is not right for what they are doing. But the mental game for trend trading simply isn't there. I would be much better off shorting more often (something I don't do much but can quantify) than starting to trend trade.

That said, not being able to trend trade and hold positions between reversals does suck. But the same could be said about anyone that can't counter trade, as those people would know they miss some amazing opportunities.
 
ironchef said:
If you are so good at contrarian trading, you should be even better at trend following and if so why don't you just trend follow?
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%%
LOL I average better @ Trend TRADing-investing so i do it smaller for counter trends;
except maybe SEPT.
LOL in other words the metals dealer buy$ iron buy the ton + sell an iron pan pan for about $5;
amazing profit %%, but he's sold out lately/no wonder new iron pan maybe cost @20+ tax:D:D
 
I'll do the occasional short fade trade but I dont usually stay in the trade long. They're hard to resist because the win rate is fairly high.But the profits on those trades are usually nothing to write home about(expressed as a percentage). On the long side seems like at least once a week some stock will go parabolic and offer an insane profit. There's really no version of that in the world of shorting.
 
Aisone said:
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:

1) Always had instincts for going against the grain trading, nothing for trend following.
2) Have been only counter-trading since I began (long time ago.)
3) Always traded 'worst of the worst' volatility, which can jade someone against holding positions and make that more nerve-racking than higher volatility trading
4) Conditioned addictiveness of quick rewards and taking quick profits (when profitable)
5)All analytics and signals have been built for years for counter-trading, nothing for trend trading
6) Trading (manually) is first and foremost a mental game. All the analytics in the world won't help a manual trader if their mind is not right for what they are doing. But the mental game for trend trading simply isn't there. I would be much better off shorting more often (something I don't do much but can quantify) than starting to trend trade.

That said, not being able to trend trade and hold positions between reversals does suck. But the same could be said about anyone that can't counter trade, as those people would know they miss some amazing opportunities.
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:thumbsup: 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.
 
tomkat22 said:
I'll do the occasional short fade trade but I dont usually stay in the trade long. They're hard to resist because the win rate is fairly high.But the profits on those trades are usually nothing to write home about(expressed as a percentage). On the long side seems like at least once a week some stock will go parabolic and offer an insane profit. There's really no version of that in the world of shorting.
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If you swing trade, buy puts, wait for reversion to the mean.
 
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