Go Against the Grain
The foundations of how crowd behavior relates to investing are rooted in distant history, all the way back to the famous Dutch tulip mania of investing folklore. Interestingly, the behavior of crowds is a paradoxical indicator when applied to stock markets. When most investors are in consensus and are driving the market in a particular direction, one naturally thinks that the consensus will continue ad infinitum and that the best trading decision is to follow the crowd.
However, history has proven exactly the opposite. When driven strongly by consensus, crowd behavior is actually a contrary indicator. When the consensus of the majority of investors or traders is strongest, the individual trader should do exactly the opposite of what the crowd is doing. The astute trader can profit by doing quite the opposite of what, at first glance, seems logical. When the market is strongly bullish, the astute trader is ready to short the market. When the market is bearish, he or she gets ready to buy.
go against the grain
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$20.00 |
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Mkt cap ! $2.556B | |||
| Open | High | Low | Value | Volume |
| $19.88 | $20.07 | $19.73 | $11.80M | 591.1K |
Buyers (Bids)
| No. | Vol. | Price($) |
|---|---|---|
| 2 | 5901 | $19.97 |
Sellers (Offers)
| Price($) | Vol. | No. |
|---|---|---|
| $20.00 | 3262 | 5 |
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