Countermove

Dictionary Says

Definition of 'Countermove'

The movement of a security's price against the current trend. A countermove occurs soon after the original trend and in the opposite direction, but by a lesser amount. Countermoves allow investors to try to "buy low, sell high," by taking advantage of the price retreating along the current trend to obtain a better entrance.

Also known as a retracement.

Investopedia Says

Investopedia explains 'Countermove'

Gains had by trading on countermoves are usually smaller because the full market swings are not recognized. Risk of loss is also high because traders often mistake a reversal for a countermove or retracement. For this reason, having a stop-loss in place is imperative.

For example, if the stock price moves up $15 and stays around the new level, it is just considered a move. But if the stock price moves up $15 then quickly moves down $11, it could be considered a countermove.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Countertrend Strategy

    A trading ...
  2. Contrarian

    An investment ...
  3. Technical Analysis

    A method of ...
  4. Trend

    The general ...
  5. Trend Analysis

    An aspect of ...
  6. Retracement

    A temporary ...
  7. Risk

    The chance that ...
  8. Universe Of Securities

    A set of ...
  9. Arithmetic Mean

    A mathematical ...
  10. Fundamental Analysis

    A method of ...

Articles Of Interest

  1. Using Double Tops And Double Bottoms In Currency Trading

    Find out how to apply the two most common price reversal patterns to your trading.
  2. Support & Resistance Basics

    Understanding this key concept can drastically improve your short-term investing strategy.
  3. Can Perpetual Contrarians Profit As Traders?

    Succeeding as a contrarian is all about knowing when to act on your opinion about the next turn in the market.
  4. Speed Resistance Lines

    Learn how to measure the uptrend and downtrend lines on a finance chart.
  5. Forex: The Memory Of Price Strategy

    Hate getting stopped out right before the price reverses? This forex trading strategy may help.
  6. High-Tech Fibonacci

    Fibonacci developed this system in the Middle Ages. See how it can provide accuracy without sacrificing readability.
  7. Advanced Fibonacci Applications

    Extensions, clusters, channels and more! Discover new ways to put the "golden ratio" to work.
  8. Tips For Controlling Investment Losses

    A profit/loss plan helps investors recognize mistakes and invest logically, rather than emotionally.
  9. Triple Screen Trading System - Part 4

    How can a trader use the Elder-Ray oscillator as the second screen of this system? Find out here.
  10. Triple Screen Trading System - Part 3

    Learn about market wave, the second screen in this three-part system.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center