Reverse Indicator

A reverse indicator, also called a contrarian or inverse indicator, is a source of market opinion that is treated as reliably wrong, so that traders take the opposite position to what it suggests. The label is often applied jokingly to well-known commentators, to magazine covers declaring a trend, or to surveys showing extreme optimism, the idea being that when everyone is already bullish few buyers are left. In crypto, social media is full of claims that a particular influencer, analyst or even a group of retail traders is a reverse indicator, and FUD or euphoria on forums is sometimes read the same way. Some sentiment-based strategies formalise this approach. The evidence is weak: memorable wrong calls are noticed more than correct ones, and a source that is wrong half the time offers no edge either way. Also see bull market and influencers.