When I trade my approach is contrarian. That is, I like to buy when others are selling and I like to sell when others are buying. I also like to buy low and sell high. Some of you might say, “Duh! That’s what you're supposed to do!” Well that may be what you're supposed to do, but it doesn't mean everyone does it. Let me invoke a very well known expression; it's easier said than done.
One of the easiest ways I know to be contrarian is to look at the news headlines. Whenever there is a concentration of bullish or bearish headlines that says something. Fade the headlines, I always say. In fact, I keep a spreadsheet and I do a Google search for some market-focused keywords like stocks, bonds, gold, oil, dollar, euro, etc. I search in the "News" search category. Then I record the number of results.
When doing it this way you can easily find search results now and over time and that will be a great contrarian indicator for you. And when you graph your results that quite fun.
Another way and one that I particularly like, is to keep track of some widely followed pundit, especially s0meone that has a long history of being wrong or, “cold.”
Back in the day when I was a floor trader that was one of my favorite trading approaches: I’d fade guys in the pit who were cold. You buy when he/she sells and you sell when he/she buys.
Here is a classic example. Jim Rogers. This guy is constantly in the news, yet his views are wrong far more often than they are right. That's because Jim is out of "paradigm." What this means is that he is examining policy shifts and other fundamental factors through an inapplicable reality.
Rogers looks at the world as if we were still on the gold standard. We are not. That's why he will be wrong every single time. It’s like playing poker or chess with the wrong set of rules.
Moreover, since Rogers is on TV quite frequently a lot of people follow hm.
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