An appearance model is critical for most modern trackers. While numerous novel appearance models have been proposed with demonstrated success, challenges such as occlusion and drifting are still not well addressed. In this paper, we propose a novel contextual bag-of-words (CBOW) discriminative appearance model that appropriately handles drifting and occlusion. Specifically, a contextual region containing both the target and its surroundings is explored to construct a compact representation with two bags-of-words. Each word carries discriminative appearance information that is learned by Bayesian inference. An adaptive updating approach, where the background BOWs of the CBOW model acts as a "sentinel" to prevent the integration of the background appearance with the object model, is introduced to alleviate the drifting problem. Based on CBOW, visual tracking is posed within a Bayesian framework. Moreover, an explicit detection method is employed to handle severe occlusions, which further reduces drifting. Two trackers based on the same CBOW model are implemented using either handcrafted color/texture or deep convolutional features. Our trackers are evaluated based on the popular OTB50 and VOT2015 benchmarks and perform competitively against the current state of the art. In addition, they outperform two recent BOWs trackers by a large margin using the currently available figures of merit. To take into account a tracking breakdown, we propose a new figure of merit called the mean maximum-tracked-frame ratio (MTFR) that evaluates a tracker's temporal persistence without any interruption. Experiments with OTB50 demonstrate the superior robustness of our tracker compared with all other evaluated trackers on the basis of MTFR.