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.To get more news about
Trading Strategy , you can visit wikifx.com official website.
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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