The Contrary trading it stupid?

A person, fed up by all the wrong trades he/she is making , one day decides that he/she would enter just the opposite of what the analysis is saying. Can the person be successful or how long can he/she stay successful doing this. What you guys think? Very curious to know all the thoughts


You might get lucky, so experiment with it on a demo account.


Depends on the strategy…

Whats the strategy?

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The strategy of most private retail traders is to take long positions in downtrends and short positions in uptrends. That is what sentiment indicators from brokers always show.

The performance of most private retail traders is also shown by brokers to be negative, i.e. most are losing money.

So it does seem that to have the best chance of winning at trading, you should avoid doing what most traders do.


Any strategy. If vast majority of the trades according to that strategy are losers, why not analyze according to that strategy & enter the opposite trades. :smiley:


Mos def worth a shot. See what the entry and exit signals are. Go for it!

It should be worth focusing on the failed trades, to pin down why they went into loss, why they were stopped out or had to be closed manually. If its just an entry timing issue or stop-loss being set too tight, simply flipping the entry signal won’t work well.


Exactly, @tommor
The reasons for such a high level of overall losses amongst retail traders is not necessarily always due to just the entry. In fact, I would suspect that it is much more due to bad exiting tactics.

For example, stops too close, closing out profits too soon, hanging on to losing trades,

So just entering in the opposite direction is not likely to automatically reverse losses into profits.

Rather, I suspect it would be a better solution to improve one’s exit strategies to optimise the overall profit/loss.

Afterall, one can have a high win rate, maybe even 70% or more, and still lose money overall.

So I would suggest just working to improve one’ s trading parameters and turning it into a winner would be far more productive than trying to reverse-trade a losing approach.


I agree. @kurmur , try backtesting your strategy.

Have you tried that?

Great points. The one saving feature in reversing an entry signal is, for me, that newbies usually use signals to enter counter-trend. Reversing this of course makes for a with-trend entry, which should be a higher probability trade. But of course, this is simplistic - blindly reversing a signal isn’t enough.

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I totally agree with you. What you said is correct without any doubt. But here, let’s assume that there is no entry timing issue & the stop-loss is set much wider. The entry rules of the person are very weak. What all can go against this Contrary trading approach other than the ones you pointed out. We all know that over the course of time, the person may get better with the analysis & simply reverse trading at that time could be leading to losses.So, let’s also assume that the person is an absolute newbie or someone who couldn’t improve by time.

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During my early days, I came across a strategy. 2 moving averages & one stochastic oscillator. When the smaller period MA crosses the other from below & stochastic oversold, then BUY & SELL when the opposite happens. But those who have invested enough time with indicators can straight away say that simply an oscillator reached overbought or oversold levels doesn’t mean that the market will reverse because the oscillator can stay in those extreme levels for an extended period of time. But, still I backtested this & I was long when the smaller period MA crossed the other MA from below & oscillator at oversold level. But as the market was strongly trending down, it crushed that entry signal & it would’ve been a win with the reverse approach.

MA cross-overs are very poor entry signals even when used conventionally. They fail because the crossover point in time occurs with no correlation with price at that time or even recently. Its not just that MA’s are lagging, its that MA crossovers are irrelevant.

So its hard to think that reversing a non-signal’s direction would convert it into a winning strategy.

Taking a legitimate signal though, such as one of the popular candlestick patterns, might be worth exploring.


I agree. Perhaps give this a try.

I am probably being my usual dumb self here, but are you not mixing two very different things here?

As I understood it, the OP was suggesting that whenever one’s own analysis says buy, you sell, and whenever it says sell, you buy. In other words, just doing the opposite of whatever you would normally do.

But it seems you are moving into spotting and trading reversals in price action compared with trading the trend? Trading reversals is a legitimate and often highly profitable trading method but I think it requires quite a lot of experience, particularly in managing risk and equity protection - but then so do all consistent methods! I also suspect that it is risk exposure and money management which is the core problem with losing traders - not the method itself.

BTW @tommor, I totally disagree with you about moving averages, but we have talked about that often already, so I won’t go into that again! Haha! :mask: :upside_down_face:

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Trading reversals is a high risk low probability strategy that beginners get sucked into. And they just shouldn’t bother. But if you’re using them and they’re making money, take them.

Yes, of course, reversing the direction of a reversal signal would mean following the trend. Which I like.

I love MA’s. They’re the only indicator I find it worth using. But not cross-overs!!!


Same here. They are all I have ever really used, literally for decades. I have occasionally tried out the usual accessories like RSI, MACD, etc but tbh they have never added anything that is not already visible in the MA structure. So I have never stuck with anything other than my core MA’s

As you suggest, there are many things that MA’s can give you and perhaps one of the most important is highlighting the direction and strength of the core underlying trend, or lack of trend, amidst all the chaos of the up and down individual candles.

I wouldn’t agree that crossovers are bad for entries because they lag. Sometimes it is better to be a bit later into a trend start and not get freaked out every time the price dives in the wrong direction as the trend gets underway. It can also help avoid the damage from a series of whipsaws while the price actually goes nowhere.

But we have talked before, and agreed, that crossovers are certainly not a good idea as an exit strategy (with the possible exception of dropping to a shorter TF for the exit signal), mainly because trends tend to end much faster than they start, when everyone scrambles to get out of positions at the same time.

But I do think that (even by definition) MA’s do correlate with price action and always include the latest price movement. The fact that an individual candle might be going the other way at the time of a crossover is, in fact, often negated by the very fact that the MA’s forming the crossover are warning of the overall bias in the other direction.

I have noticed that there is a majority leaning on BP towards Price Action and a rejection of indicators. But Price Action techniques have now been around for some time and many books and threads have been created about PA - but the percentage of losing traders remains the same. If PA techniques such as candle formations, S/R lines, trendlines, etc were so proficient one would expect that the percentage of profitable traders would have significantly increased by now - but it has not.

So the obvious conclusion is that the problem lies in something other than the choice of chart analysis tools. And if that is the case, then, getting back to the topic of the thread, simply trading the opposite of your method’s signals is not going to resolve the problem at all. That would be a bit like trying to make your car navigator more accurate by always turning left when it says turn right, etc instead of updating the software!

I also think that trading the opposite direction would be severely demanding psychologically and incredibly intense trying to remember to do it and keep one’s head straight. But maybe longer term TFs would be easier to manage in this way (but extremely nerve-wracking while waiting to see how such a trade works out!)

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So, for the moment, we can summarize the whole discussion like this.

A person, assuming he/she not simply bluffing & gambling, has got a strategy with clear entry rules, but,trades are losses vast majority of time if not all the time, not due to stop-loss too close or mis-timed entries as tommor here pointed out, then simply analyzing according to the strategy but enter in the opposite direction can pull out successful trades.

So, one can be successful in trading even without a winning strategy? :laughing: Maybe …


This is strange. I was thinking about this idea too. as if you hijacked my thoughts

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Contrary trading can be very profitable, but it’s also risky. It’s all about timing: buy when others are selling and sell when others are buying. If you get it right, you’ll make good profits, but if you get it wrong, your losses could be substantial.

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