What are the techniques for applying contrary theory?

  • 2025-07-16

Like the Adam Theory, Contrary Theory takes mass investment behavior as its inductive sample. Situated between fundamental and technical analysis, Contrary Theory suggests that investment decisions should be based on crowd behavior. According to this theory, when everyone is bullish in stock or futures markets, it signals a market top; when everyone is bearish, it indicates a market bottom.

 

Contrary Theory is an investment concept that's simple in description but profound in practical application. It offers the following operational guidelines:

First: Make decisions after careful consideration, free from others' influence. Judge independently and remember both risks and profits are yours alone;

Second: Challenge conventional wisdom, stay grounded in reality, and handle matters objectively;

Third: Understand that development has both apparent and hidden aspects. Remember that extremes lead to reversals - maintain a dialectical perspective. Taking a longer-term view increases your chances of success;

 

Fourth: Control your emotions during investments - fear and greed are counterproductive. Particularly when markets rise with high profits or fall with rapid losses, maintaining composure amid fluctuations demonstrates true skill;

Fifth: As the saying goes "A wise man submits to circumstances." This applies equally to stock markets. When reality contradicts our expectations, we must learn to admit mistakes and quickly identify errors to prevent further losses;

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