The goal of contrarian trading is basically to sell at the top of a rising market and buy at the bottom of a falling market. To make small profits out of small fluctuations. Because there are always small fluctuations in the market, the contrarian strategy has more opportunities to trade, and conversely, the number of trades is too much to pay attention to the disadvantages, it must pay more trading costs.

Compared with trend or trend trading, it should have a higher win rate and more stringent stop-loss conditions. The following record common contrarian indicators, which can be divided into five categories: price indicator type, interval, channel, price band type, technical indicator type, K-line form type, short and long interval relative price type.

1. Price indicator type

Use the recent market price to calculate the support pressure point of the day. When the market falls and meets the support point, buy and sell at the pressure point, such as CDP and PivotPoint.

CDP inverse operating system, first find the CDP value of yesterday's market (that is, the average price) : CDP = (opening price + highest price + lowest price + closing price) /4,

Then calculate the highest value (AH), near high value (NH), near low value (NL) and lowest value (AL) of yesterday's market respectively:

AH = CDP + (highest price-lowest price)

NH= 2 * CDP - the lowest price

NL = 2 * CDP- highest price

AL = CDP - (highest price - lowest price)

Pivot Point = (high + low + close) /3

Long entry point = (2 * Pivot) - low price

Short entry = (2 * Pivot) - the highest price

Bull entry point = Pivot - (high price - low price)

Short entry point = Pivot + (high - low)

Band starting point = (2 * Pivot) - 2 * low + high

Band starting point = (2 * Pivot) - 2 * high + low

2. Range, channel, price band type

This type can be linked from the price index to form a channel, but more can average multiple prices to get a faster response to the upper and lower edges of the channel. For example, Bollinger channel, recent range.

Bollinger channels, "Bollinger bands" are defined as follows:

Midtrack = N- Simple moving average of time period

Upper orbit = middle orbit + K * N- standard deviation of time period

Lower rail = middle rail -k * N- standard deviation of time period

In general, set N=20 and K=2, these two values are also the most used in the Bollinger band. On a daily chart, N=20 is the "monthly moving average" (MA20). According to the normal distribution rule, about 95% of the values will be distributed within plus or minus 2 standard deviations from the mean. (Bollinger Band countertrend strategy)

The recent interval is simply the high and low points of the recent trading day as the pressure support, such as the high and low points of the past 30 days are 8200 and 7700

3. Technical index type

Calculate market overbought and oversold areas with technical indicators as the basis for contrarian trading, such as RSI, relative strength index; Williams %R, Williams index; KD, random index, etc. This kind of technical indicators in the Internet search has a lot of discussion, let's not write.

4. K-line form

From this, it can be clearly seen that the technical trading system is only a part of the trading system, not the whole. When the technical trading system appears in the signal period, it is not the system that is making decisions, in fact, it is people who are making behavioral decisions comprehensively. A good trading system, including mentality, technology, requirements, patience, control and so on. Therefore, the trading system is a comprehensive analysis system to solve the decision system at the right time, choose the right object, and carry out the right behavior.

This type defines the contrarian approach point by judging the shape of the K line. For example: find out the link of the relative K line high point, similar to swingHigh, SwingLow method long K line against the trend, three points K line to kill 100 points, as a reverse buying pattern;

And now the day has killed three waves, ready to buy against the trend.

There are many ways to continue to study this kind of form, but the problem is that some of them are not easy to practice in program trading, and it is necessary to clearly describe the definition of form and transform the program.

5. Relative price type of long and short intervals

The contrarian trend is the current trend, but not the trend in the longer term, but the trend. For example, a long band has been ten days, one day when there is a decline, the trend is against the bulls. This concept has some weight in existing trading strategies.

It should be noted that the above indicators are applied to the inverse indicators calculated in the market price, and do not consider whether the market is suitable for these inverse indicators, such as in the range of strong bulls or strong bears of a commodity, using these inverse indicators may be very easy to cause losses.

It is not easy to choose the market or time suitable for the contrarian strategy, but some simple rules can be used to avoid contrarian trading in the market with obvious trends or large fluctuations, such as rapid increase in volatility, rapid expansion of amplitude in recent days, continuous passivation of technical indicators, trading volume or open interest is significantly enlarged, and so on. It may not be suitable for contrarian strategies, and contrarian trading should be reduced.

Back to the introduction of the inverse indicator, the application is not limited to the inverse strategy, such as KD can be passivation, Brin channel can be a trend breakthrough, each indicator and application are very broad.

Basic analysis for each commodity has a calculated target price, and there is a gap with the market price can be entered for convergence. However, the analysis method of basic analysis is very complex, the variables can not be exhaustive, and how much time it takes to convergence after entering the market is difficult to estimate.

We don't have a target price, we go in and we make a trade and we think it's feasible because there are always small fluctuations in the market, and we want to sell at the high of the small fluctuations and buy at the low. That's the principle. Do you believe in this principle? This will affect the future operation.

Fundamentalists believe that the market will move towards their target, and if it does not, adjust the methodology. The technical analysts believe that they will catch small fluctuations, so they do small fluctuations of the countertrend trading, if you can not catch, the strategy is losing money, you are willing to continue to believe that you can catch it? This is the part of the psychology of trading that should be discussed, and ultimately we have to understand and believe that the trading we do is exactly why we gain and why we lose.