Countertrend Strategy

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DEFINITION of 'Countertrend Strategy'

A trading strategy where an investor attempts to make small gains through a series of trades against the current trend. It is also known as "counter-trend trading".

INVESTOPEDIA EXPLAINS 'Countertrend Strategy'

Contrarian investors perform counter-trend trading strategies - purchasing shares when prices are low and selling when they're high. The investor receives smaller gains since the full market swing is not recognized.

Many counter-trend investors use momentum indicators to determine the best times to execute their trades.

RELATED TERMS
  1. Sideways Market / Sideways Drift

    A sideways market occurs where the price trend of a certain trading ...
  2. Contra Market

    A move against the direction or trend of the broad market. Contra ...
  3. Countermove

    The movement of a security's price against the current trend. ...
  4. Contrarian

    An investment style that goes against prevailing market trends ...
  5. Momo Play

    A slang term used to describe an advanced trading strategy based ...
  6. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
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