Market Sentiment Contrarian Strategy: Why Sell in a Bullish Trend and Buy in a Bearish Trend?

There is a trading rule circulating in the market—**Sell at the peak of market sentiment, buy when the market is pessimistic**—which is "not very mainstream but effective." This logic sounds counterintuitive, yet many veterans regard it as a guiding principle.

**Why operate in a contrarian manner?**

The deeper logic behind this is that the market often sows the seeds of reversal at extreme emotional points. When everyone is frantically buying, it is usually the moment when risk is most accumulated; conversely, when panic spreads and everyone is selling, it might actually be the best opportunity to get in.

Retail investors often fall into the trap of being driven by market sentiment—FOMOing in when prices rise, cutting losses and fleeing when prices fall. The result is always buying high and selling low.

**The wisdom of knowing easily but doing hard**

It sounds simple, but it’s difficult to execute. It requires sufficient psychological resilience and patience—to stay rational when everyone is screaming and to dare to buy the dip when the market is in despair. Most investors lack this kind of resolve.

Therefore, although this theory is not favored by trend followers, it is precisely because it is unpopular that it may be more effective—because very few people can truly do it.