Contrarian Trader or Trend Trader?

Tom Gentile

Posted in Daily Report

By: Tom Gentile on May 10th, 2022 • 2 mins read

How you Trade is Your Decision

Yesterday the discussion was what it means to be a contrarian trader.

The idea behind being a contrarian trader is that you would not fall victim to the herd. If everyone is doing things one way, and it isn’t necessarily the right way, everyone in that group is at risk.

Of course, if things are going well they have a chance of continuing to do so for a period of time.

We are in a bearish market environment right now and eventually that will end.

The discussion of contrarian trading yesterday was to speak to the mindset of trying to find sectors and industries, hence stocks or ETF’s that may be bucking that trend. It was encouraged for one to assess support levels, study price behavior at those levels and if a bounce seemed likely consider an option trade at that time.

To be a Trend Trader

The flip side of being a contrarian trader is to be a Trend Trader.

Just because we talked about being a contrarian trader as a way to gain a trading edge, there is some merit to trading with the trend.

A trend trader is one that sees an uptrend or downtrend in the market, assess the trend should last months or more and positions themselves to be in the market and plan to ride out the momentum for as long as they can.

They look for more of a global economic assessment and geopolitical concerns and less on technical chart patterns, per se.

The trend can be an uptrend as it is in Oil or a downtrend like Bonds.

Yesterday, images of the Morning Reports were given so one can decide if they see an opportunity from a contrarian view.

Equities overall, are in a downtrend, but if they saw a support level on a stock whose option made a bullish list that would be a place to discuss further with their broker.

Today’s images are provided so if one sees an option on a stock they feel is likely to trend in the current direction of the markets (sector or industry it is in) they can consider an option from a trend trader’s perspective.

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App: Toms Option Tools

Market Insight articles may show images of lists of stocks meeting a variety of options parameters like Unusual Call and or Put activity or Expensive IV found on my app Toms Option Tools.

Other times I will have other charts may work to amplify my educational points. 

Those options data lists, however, can be found on my app Tom’s Option Tools. Use your device to search up and download this app and get free access to the Morning Reports section of the app.

Other parts of the app are available at a premium subscription rate, but the Morning Reports Lists are yours free.