I saw this article which shows that buying the worst performing ETFs produced double the returns of buying the leaders. While this specific study relates to equities, it is a good study for contrarian and mean-reverting traders.
1 Like
Sounds like a reprint of the old “Dogs of the Dow” strategy 
Perhaps similar in its contrarian spirit, a strategy where you are buying the “dog(s)”, but quite a bit different criteria. Dogs of the Dow uses price performance whereas this study uses inflow/outflow volume instead. I also find the ETF study more compelling since you are buying a basket of hundreds of stocks rather than a few Dow stocks, thus limiting single stock event risk exposure. Anyways for us contrarians, another good study to look to and learn from.
1 Like
That s one helluva convoluted way of saying "YES " !
However we trade FOREX here - where the hell you getting “Volume” on Forex ?
Thank you village arguer and wise sage of our age 
Give me a pint of what he’s been drinking ! 
Interesting article, gave me a lot to think about.
1 Like
Personally, i think saying contrarian way is better than trend following would be quite inaccurate and erroneous. It is like saying Wing Chun boxing is better than Taek Kwon do. Both styles have their merits and pitfalls. Ultimately, the one who WIN can only be the Stronger player.
I think that even in a trending market there is mean reversion that occurs, it will just revert into a more positive or negative slope. This would be what happens in a bullish or bearish channel. For example a bullish channel where price us sold at the top of the channel as a mean reversion play, even though price is trending solidly upwards. In which case a trader can adjust positioning in their mean reversion trade based on the trend. In my previous example perhaps using lower risk when selling the top of a bullish channel and more risk when buying the bottom of a bullish channel. In other words the trend is valid and the contrarian trade can be tweaked based on the trend itself.
I agree with this.
This is where the line between trend following and contrarian trading gets blurred. IMHO, i would rather counter trend trade the pullback by averaging up (bottom of a bullish channel) than counter trend trade the top of a bullish channel. In this sense, i would agree there is more risk involve when buying the bottom of a bullish channel.
Ultimately, a successful trader doesn’t depend on whether he is trend following or contrarian trading. It depends on the timely and accurate execution of his trades.
1 Like
Fully agreed, and if this gets people thinking about the different ways to successfully trade, then mission accomplished.
1 Like