Counter trend strategy is a system that an investor uses to earn small profits in several trades during one trend instead of making a big profit in a single trade. This strategy is also called “counter-trend trading”.
Investors that trade this way are called “contrarian”. They try to buy shares at low prices and sell them when the prices are high. Small profit is made because the trend is still in the process and it has more space to go more up or down.
Using momentum indicators in order to decide which time is the best for executing a trade gives counter-trend investors more chance to have more of trades in one trend.
Some traders try to catch important levels (weekly low or high, monthly low or high, yearly low and high, important Fib levels etc.) and to trade against main trend using tight stop loss.This trading strategy can be very risky and strategy must be well design.I am trend trader and I avoid this strategy, but some forex and stocks traders are excellent in “Countertrend” trading.
Counter trend strategy example – full video: