A Contrarian trader is one who generally does the opposite of what the mainstream is doing. The Contrarian believes that if everyone is doing something, then everyone can’t possibly be right. This is precisely something that Mark Fisher stresses in his ACD System lectures. He specifically calls them Retail Bus People. His thing is if it a trade sits for a long time and everyone in the word can get into it, then how great of a trade can it really be. If you trade with the bus people you will lose. As a Contrarian if everyone is getting on the 24 Express going north, we want to be the only one riding the 36X going south.

A few tricks of the trade for Contrarians. Firstly, if there is overwhelmingly good news coming out about a company or even news suggesting a currency may move up and Contrarian will be very nervous about following the heard. This does not mean the Contrairna will always go opposite the crowd, but may sit on the sidelines and consider going the other direction when the time is right. A Contrarian will also look at oscillators in technical analysis much differently than the norm. The Bollinger Band is a perfect example of the differences in interpretation. Most traders will buy a currency if they see it has broken above the upper standard deviation on the Bollinger Band. This is a signal of strength as it has broken above a significant range. A Contrarian on the other hand will not purchase and will wait to see if the trade losses momentum and be prepared to short it. The reasons being that the currency has already made a major move to break above the bands and is more likely for it to fizzle out and come back down that keep running up.

Fundamentals also can be interpreted in a different way by a Contrarian. For instance there is a lot of news right now claiming that earnings by many US companies are not as bad as expected and this has been celebrated with the DOW running above 10,000. For a Contrarian this would not be regarded as positive news. The fact that earnings still are low means that the market is likely going to under perform. With Stocks now up over 65% from the bottom most Contrarians wouldn’t touch the market with a 10 foot pole. The optimists are buying, but the Contrarians are either short right now, or waiting for a breakdown signal to sell stocks.

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