Contrarian investing is an investing strategy that simply means going against the market. Contrarian investors go against current market views, indicators and trends to outperform the market. For example, they may sell stocks on high and buy at low even when the trends are strong. They may also prefer to buy stocks which are ignored by investors and may sell those ones which are hot favorites. The basic idea is to get into a good deal even before others realize it.

Contrarian is a strategy which can be followed in both bull market and bear market. The strategy works best when the markets are wrong; like in bubbles and bursts. The most similar strategies to contrarian investing are value investing strategy and deep value investing strategy. Like value investors, contrarian investors look for mispriced stocks using indicators like book value and P/E ratio. But contrarian investors also consider the market sentiment using indicators like volume indicators, earning forecasts, industry performances, analyst and media commentaries, etc before making decisions.

Contrarian investing involves very high risks and it demands high levels of market knowledge, intelligence, trading experience, market research and trading data. There are some contrarians who just like go against the market all the time; which can't be a good strategy as the market is right most of the time. The right strategy can be to look for opportunities where the market 'can' be wrong.

NobleTrading.com Offers Online Stock Trading, Online Options Trading
Stock Trading, Stock Market Trading,
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage

Disclaimer…The subject matters expressed above is based purely on technical analysis and personal opinions of the writer. it is not a solicitation to buy or sell.