Trading against the market.
Most recommendations advise trading with the trend; trend-following strategies are considered less risky and more profitable.
But there is also a category of traders who prefer to trade contrary to the existing trend, and such trading in most cases turns out to be more profitable than the classic one trading.
The reason for this situation is that when you open a trade following a trend, you very rarely enter the market at the best price. In most cases, you're already too late and caught in the middle of the trend.
By opening a trade against the trend, the investor expects a quick reversal, and if their expectations are met, the order is opened in the best place.
You shouldn't think that you can make money simply by opening a trade against the existing trend; such behavior looks more than naive.
This type of trading also requires a well-thought-out strategy based on an assessment of the real value of the selected asset.
The most obvious example of this strategy is buying stocks that have collapsed due to panic. Typically, negative news puts excessive pressure on the market price, causing it to fall below the stock's actual value.
The second factor that indicates an unjustified price drop is the unfounded impact of the news. For example, the director of one company was caught in an intimate relationship with his secretary, which caused a significant drop in the company's share price.
It can be said that the decline is temporary, more of a panic-like nature, than a real reduction in the value of the company's assets.
Panic has repeatedly allowed for the making of fortunes, with the biggest gains coming from trading against the trend.
The third point to consider when trading against the trend is the proximity of the bottom. If you rush into a trade, you may not see a profit. Yes, the trend may reverse after a while, but will you be able to withstand the price pressure?.
And the fourth rule that anyone choosing to trade against the market must follow is the ability to wait. Don't rush into trades unless there's panic about a particular instrument.
A counter-trend trading strategy can be a lifeline for traders who are struggling to make a profit, perhaps a radical change strategies This is exactly what will help them succeed in trading on the stock exchange.
