Countertrend Strategy

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".

BREAKING DOWN '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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RELATED FAQS
  1. Why do some traders implement counter-trend trading into their core strategies?

    Learn about differences between trend trading and countertrend trading, and discover why some traders add countertrend trades ... Read Answer >>
  2. How risky is it to create a counter-trend trading strategy?

    Read about some of the different kinds of risks involved with trading strategies that rely heavily on countertrend trading, ... Read Answer >>
  3. How do countertrend trading strategies work?

    Profit from countertrend trading strategies that are used to catch trend changes or to make additional profits from temporary ... Read Answer >>
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