Guideline: Effective Analysis v. Contrarian Theory

The probability of greater rewards would outweigh the risk of loss in a given period of time. Other traders and or analysts for that matter, often times look at what the overall market sentiments are. One of the most common is the traders speculative positions and market sentiments index that shows the percentage of long against short positions in each currency pair traded.

Other traders, crowd sentiments are often associated with the general contrarian strategy that traders perhaps opt to practice from time to time in their way of trading the market. Here is a comparative guideline for an effective analysis v contrarian theory that would be useful to know in trading these markets. Which are sometimes a good sense of justification whether the presumed trade goes in line with the crowd sentiments or not. The degree of difficulty to identify a potentially good trade setup may take time to develop. And market orientation of most traders nowadays are focused on what the market presents that can be best taken into account for a good trade. Essentially timing the execution is the next issue to consider.

Most often, traders' eagerness to re-position after a loss, may well have the same negative result; as the emotional factor of getting even in the market takes place. This should always be avoided as it would not help build market trust, trading ability and confidence in trading analysis for traders / investors particularly for retail trading that has smaller capital for risk tolerance.