Been noticing my best wins happen when I do the opposite of what everyone else is doing.
Curious what contrarian signals you guys rely on. Currently watching sentiment indexes and positioning data but wondering if there are other reliable indicators worth tracking.
Put/call ratios work well too. When everyone’s buying calls, trouble’s usually coming.
I watch positioning data and news coverage to spot when everyone’s crowded on one side.
When 80%+ of retail traders pile into the same direction, I start looking for entries against them. EURUSD hit those levels in early 2023 - the reversal was brutal.
Pay attention when financial news gets echo-chamber loud. Remember all those dollar strength headlines? Right before it started tanking.
Volume tells the story too. Massive breakout volume that doesn’t follow through? Retail just got played. I’ve caught some great moves fading those fake breaks.
Key is waiting for real extremes, not just mild shifts. Takes patience but pays off big.
COT reports are key for contrarian trading. When commercial traders go one way and retail follows the opposite, that is your signal. Look for extreme readings in sentiment surveys, above 80% or below 20%. VIX spikes indicate panic, often signaling market bottoms. Pay attention to media headlines; prolonged doom coverage can precede reversals. Focus on real extremes instead of minor sentiment changes.
VIX and RSI work well when people are too happy.
Market divergences are perfect for this. Price hits new highs but MACD or RSI shows weakness? Retail keeps buying while smart money’s already out the door.
I watch for currency correlation breakdowns too. Pairs that normally move together suddenly split? Usually means something big’s coming that everyone else misses.
Best trades happen when technicals and sentiment both hit crazy extremes.