​Countertrend Strategy: Become Wealthy by Taking Risks!

The majority of individual investors are often hit by losses because the mindset of trend trading has been carved on their DNA. The mentality leads them to the irreversible fallout from the wrong timing of market entry, guiding them to buy in when the market approaches the peak and sell out if it is close to the trough.

Originating from market cycles, a countertrend idea refers to seizing the opportunity of entering the market before its reversal. However, the following points should be noticed as this strategy is very demanding.

Pay attention to the group psychology

Group psychology determines the market trend by affecting collective behavior. Observing this interpersonal functioning is beneficial to traders in confirming whether an extremely pessimistic or sanguine attitude is dominant in the market, which is critical.

Use indicators in a comprehensive manner

A countertrend strategy is intricate as it is made based on the market sentiment, thus generally exerting its influences with the cooperation of oscillators (OSC), moving average convergence divergence (MACD), stochastic oscillators (KD), and the stuff.

Orchestrate trading plans

Plans for countertrend strategies should be precise, consisting of analytical factors, observational indicators or information, and the timing of building positions and stopping losses. The stop-loss operation is of paramount importance because of the highly risky countertrend trading. Its absence can infinitely exacerbate traders losses even trigger liquidation once the backlog of the existing market trend occurs.

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