Countertrend Trading
Definition of 'Countertrend Trading'A type of swing-trading strategy that assumes a current trading trend will reverse and attempts to profit from that reversal. Countertrend trading is a medium-term strategy in which positions are held between several days and several weeks. Countertrend traders rely on graphs (such as the Bollinger Band®), indicators (such as the Aroon indicator) and oscillators (such as the relative strength index or Chande momentum oscillator) to make their decisions. |
|
Investopedia explains 'Countertrend Trading'Countertrend trading can be used as part of a diversification and risk-reduction strategy. To limit losses in the event that a trend does not reverse, traders should consider using strategies such as stops and time-based exits. Countertrend trading is one of the most common tools used by contrarian investors. |
Related Definitions
Articles Of Interest
-
Confirming Price Movements With Volume Oscillators
Use this indicator to validate a change in price direction and moving averages. -
An Introduction To The Relative Strength Index
Learn the difference between relative strength and the relative strength index, a frequently used technical analysis oscillator. -
Momentum Indicates Stock Price Strength
Momentum can be used with other tools to be an effective buy/sell indicator. -
An Introduction To Oscillators
Find out how this indicator may help improve the average investor's entry and exit points. -
Anticipate Trends To Find Profits
Monitoring your trades in real-time can help you anticipate their outcomes. -
Finding The Trend With Aroon
Don't be confused about whether a long-term trend will continue, stall or reverse. -
Candlesticks And Oscillators For Successful Swing Trades
Take advantage of short-term price moves by pinpointing reversals. -
Market Summary For May 17, 2013
The U.S. stock markets moved sharply higher this week, on track for its fourth straight week of gains, driven by ongoing improvements in economic indicators. -
Parabolic SAR Buy Signals
The Parabolic SAR indicator is flashing "buy" in these four diverse stocks. Not simply relying on one indicator though, I take a look at the overall technical outlook and determine which ones ... -
Sell In May – Yay Or Nay?
Seasonal timing in the market, best personified by the adage, “Sell in May – Go away,” has long been the subject of debate among investors. The question remains: Is there anything to it?
Free Annual Reports