Can Perpetual Contrarians Profit As Traders?
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
