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.

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