"The art of contrary" thinking is one of the most powerful tools
a trader can use, and is a trait with which all true great traders are
familiar with.
What is the Art of Contrary Thinking?
Humphrey Neill's book, "the art of contrary thinking," the best
known work on the subject, is based on a simple powerful idea that:
"When everybody thinks alike, everybody is likely to be wrong"
"The art of contrary" thinking consists in training your mind to
ruminate in directions opposite to general public opinions; but basing
your opinion in the light of current events and human behavior".
Why Contrary Trading Works
By spotting situations when the consensus of a currency is either
extremely bullish or bearish, means that a trend change is imminent, as
it is likely the emotions of greed and fear have pushed prices too far
away from true value.
If you can step aside from the crowd and take a contrary view at these
turning points, you can make big currency trading profits. Contrary
thinking can be used in any market and is highly effective in
currencies.
Contrary thinking can be used to make really big currency trading
profits and if used selectively, when markets are extremely over bought
or oversold, you can be in right at the start of the trend for maximum
profitability.
In any currency you look at - The Yen, Euro, British Pound Swiss Franc
Canadian or Australian dollar and many others, there are always
occasions where a currency trend in the news is forecast to continue,
due to overwhelming evidence in its favor and it then promptly
collapses!
Big profits from currency trading can therefore be made by using the art
of contrary thinking when the market is extremely bullish or bearish.
Why? Because everyone who has bought has taken positions and there are
no buyers left. Prices have moved away from fair value. When there is no
more buying to enter the market, a trend change is imminent.
It is clear that to succeed and make big profits in currency trading you
need to think independently of the majority at important market turning
points.
You can make big profits in currency trading from trend following, but
you can with a little practice spot potential turning points in
currencies as well which will help you bank profits, tighten stops or
open new trades right on the turn, for maximum profitability.
Contrary trading will not only make you big profits in currency trading
but in ANY market and has worked for centuries, as human nature never
changes.
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