Countertrend

Countertrend example

Countertrend ( counter – trend) is a move against the prior or prevailing trend. For example, the trend was up 50% for 90 days, then declined 10%, the 10% decline is a countertrend move.

A countertrend trading strategy is a strategy that bets against a trend hoping to profit from a trend reversal.

Countertrend is a system that identifies a trend reversal without waiting for it to reverse.

A countertrend system may buy oversold trends and sell overbought trends. We could say: An investment strategy in which an investor buys when other investors are selling with the intention of selling when others are buying.

Countertrend systems tend to be shorter term since long term trends can include many short term counter trend movements.

 

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  1. Pingback: Declining (Low) Volatility = Rising (High) Complacency « Asymmetry Observations

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