CTA · Core
Contrarian CTA
A CTA that tries to pick turns — anticipatory shorts of highs and buys of lows — the opposite personality of a breakout shop.
Definition
Uses exhaustion, sentiment extremes, or fundamental fair-value to fade. Holding can be short. Hit rate may be high; payoff on misses is a runaway trend. Needs brutal stops or tiny size.
Why it matters
It exists because some PMs are paid to be early. As a category it is closer to discretionary macro than to SG Trend.
Case
Shorting a 2022 rates trend ‘because it is extended’ for six months. Extended can become more extended. The stop is the strategy.
How to read it
Stop rule and the 2022 tape. If they were early and small, fine; if they were early and large, they are not a diversifier.
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