Contrarian Investing


    Contrarian investing is a dynamic field and not a static one. The assumption that it’s a static field is held by the new breed of fashion contrarians, whose only contribution to this field has been to glamorise it and distort the true notion of being a contrarian investor.  These fashion contrarians are no different from those with the mass mindset; they only pretend to do things differently, but the moment fear or uncertainty is in the air, they flee for the exits like bandits being chased by the hounds of hell.   
    A true contrarian in most cases understands the basic rules of mass psychology If you are not familiar with these rules, you are doing yourself a disservice and should catch up on them ASAP.  

    These simple seven rules for contrarian investing will provide the newbie with a firm foundation on which he or she can build from.

    At the Tactical Investor, while we embrace the concept of contrarian investing our true focus is on the joining the key rules of contrarian investing with the powerful concept of mass psychology. We believe this is the most robust system out there as psychology is the key driving force behind almost every human action.
    We are going to provide a list of rules that we believe are the most important regarding contrarian investing.   It will provide both the novice and seasoned trader with ideas that should help improve your trading skills if implemented properly.  Discipline and patience are essential traits if you want to succeed; nothing comes easily, for if it did,  everyone would be able to do what you are doing.

Key Rules for Contrarian Investing 

1) Popular media (magazines, news outlets, newspapers, TV stations, etc. really ) should be treated in the same light as toilet paper; it has some use, but its function is to perform a distasteful action.  Thus use these outlets to determine what the masses are frothing about and what you should avoid or start getting out of or into.  Remember the emotions should be at boiling point. You do not oppose the masses just because they started to jump on the bandwagon; its, only when the bandwagon is overloaded and about to buckle under the load it’s carrying that you should look for an exit and vice versa.
2)  Technical analysis plays a key part when it comes to investing, regardless of whether you choose to be a contrarian investor or not.  It is imperative that you take the time to understand the basic tenets of this very important field.  Do your best not to follow or focus only on the most popularly used Technical analysis indicators. You will be amazed at how effective some of the lesser known indicators are once you get to understand how they function and operate.
3) Spend time understanding the markets you are going to target or the sectors of the stock market you intend to play.  We have put up an extensive list of resources, all of which are free here. Free Trading Resources
4)  Formulate a sound plan.  Don’t be an imbecile and sit there wishing and hoping to catch a home run.  Those that adopt such notions, always catch a falling dagger, a process that is fraught with pain and misery.  The plan should include profit targets on each and every trade, and, an exit plan, in case the trade does not work out.
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