contrary opinion theory



  • A simple concept that states that when all investors expect the market to go up, it will actually go down. Likewise, when everyone believes the market will go down, it will instead go back up. This concept can hold true when (for example) all investors believe the currency will go down. At this point, they have already acted on the belief. This means there are no more sellers left to drive the market further down. The currency on the market has no other place but to go up as buyers enter. This concept works on all Forex and equity markets. However, it is hard to gauge when investor belief is widespread and strong enough for the theory to take effect.