The essence of trading: contrarian forecasting and following the main force
In the ever-changing financial markets, traders are constantly seeking winning strategies. At its core, successful trading strategies often hinge on two essential elements: contrarian forecasting and following the main force. Whether these two can be effective also highly depends on a key factor — the entry position.
Contrarian forecasting: Insight into opportunities
Contrarian forecasting does not mean blindly opposing market trends, but rather being able to foresee and prepare in advance when a market trend is about to reverse or correct. This requires traders to have keen market insight, a deep understanding of fundamentals and technical aspects, and an accurate grasp of market sentiment. When the market is overwhelmingly bullish, can you see potential bearish factors? During market panic selling, can you identify the undervalued assets? This ability to make judgments that differ from others at the peaks and troughs of market sentiment is key to obtaining excess returns. It requires us to break out of the herd mentality, think independently, and dare to make different judgments.
Following the main force: Going with the trend
However, merely contrarian forecasting is not enough. The real driving force of the market is often in the hands of the 'main force', which possesses substantial funds, professional research teams, and rich trading experience. Therefore, after making a contrarian forecast, it is more important to follow the main force. This means that when judging a market reversal is imminent, we need to look for signals of the main force's capital entry; after the trend is established, we should also follow the direction of the main force, rather than going against the tide. Following the main force is not blind obedience, but rather recognizing the movements of main force capital through the analysis of indicators such as trading volume, open interest, and capital flow, based on an understanding of market operation logic.
Entry position: The key to success or failure
Whether it's contrarian forecasting or following the main force, it will ultimately focus on one crucial point: the entry position. An ideal entry position means being able to obtain the maximum potential return under the premise of controllable risk.
For contrarian forecasting, the perfect entry point often occurs when market sentiment is extremely pessimistic or optimistic, and prices are near historical support or resistance levels. At this point, the risk-reward ratio is very attractive, and once the market reverses, the profit potential is enormous. Entering too early or too late may lead to missed opportunities or unnecessary risks.
For following the main force, the choice of entry position is to select a relatively safe point with sufficient upward space after confirming the main force's intervention signal. For example, early in the stage when the main force has completed accumulation and started to rally, or just before the main force resumes power after finishing a washout. If one enters after the main force's rally has already passed the halfway mark, or even when a volume stagnation signal appears, the risk of following will significantly increase, even becoming the main force's 'purchaser'.
$BTC $ETH #Solana现货ETF竞赛 #币安HODLer空投SPK #币安钱包TGE
Follow Bai Ge and learn trading together!
