What Does It Mean To Bet Against The Herd ???

Discussion in 'Trading' started by Fundlord, Apr 23, 2015.

  1. Fundlord

    Fundlord

    In trading terms why would anyone want to bet against the herd ?

    If everyone is buying AMZN one day and it is rallying why would you go against and short ?
     
  2. romik

    romik

    As a retail trader you should follow the 'herd' ie market's direction. My cousin's fund was shorting AMZN years back based on weak fundamentals only to close position at a substantial loss. I also believe that fundamentals make little sense as basically it's just an opinion, there are lots of opinions out there, what matters is the herd's direction. Follow, but be cautious that nothing lasts forever.
     
  3. dbphoenix

    dbphoenix

    What is generally meant by that is that seasoned traders pick up on trend change and particularly trend reversal before the herd does, which commonly doesn't know anything about that sort of thing, c.f., those who saw the lower high in '00 as a "buying opportunity".

    The correctly-formed head&shoulders is a classic example of professionals manipulating the herd, particularly since so many of the herd who think they know what a head&shoulders is, don't.
     
    Swift5 likes this.
  4. Gringo

    Gringo

    Who is selling to everyone? For every buyer there has to be a seller.
     
  5. dbphoenix

    dbphoenix

    No flies on you, G :)
     
  6. Gringo

    Gringo

    Side effects of spending so much cyber time with scribblers.
     
  7. dbphoenix

    dbphoenix

    That, along with the rash.
     
  8. Gringo

    Gringo

    Roses carry their own thorns.
     
  9. blakpacman

    blakpacman

    To bet against the herd means to be a contrarian. If you bet against the herd, you are likely to be trampled into a pancake. Betting against the herd only works at inflection points, which are difficult to determine, thus most traders try to trade in the direction of the major trend.
     

  10. The biggest secret why most "elite ET" loss is NOT because they go against the herd, but they go against Fed !!
     
    #10     Apr 23, 2015
    marketsurfer and blakpacman like this.