What is CounTrend strategy?
CounterTrend strategy is a method of investing where the investor goes against current market trends to earn main investors. When other investors are primarily sold, the investor CounterTrend is buying, and when others buy, they will sell. This uses dips and outflows on the market, but in fact it is profitable when the market has a drastic increase or decline. Methods used to determine the profitability of the countermeasure strategy are usually very complex; One wrong step and the investor are left with many worthless investments. For many investors, it is much more common with the market flow and driving on variations than to respond directly to the market. In addition, investors tend to go with the majority trend, which often equals "buying high, low". When market decline and the price of investment will drop, buying a rate much lower than the average. When they make their investments, the market is often in a bad situation and usually there are many more retailers than buyers. As a result, the CounTrend strategy allows you to invest the UT investorsRatit less and get more than typical investment.
When the market rises, CounTrend strategy tells investors to sell. In this case, there are more investors who are interested in buying back to the market to make use of its success. This usually leads to more buyers than sellers and allows huge profits for investor CounterTrend. These investors earn money, even if they sell an investment at the average market price because they bought when it was so low.
At first glance, the CounTrend strategy seems to be a reliable way to make money. There are two main factors that cause some impacts to avoid these methods. The first is a shortage or flexibility in the overall portfolio. The real CounTrend investor only has investments when the market is down. If the market is healthy, they have no short -term investments that apply in dividends.
the second deteriorationThe Counterdrend strategy is its dependence on market recovery. If the strategist invests significantly in a particular market, he can only hope that the market will restore its previous value. If the market ends in stabilization at a much lower rate, or if the DIP causes the company to fail, the investor is left with investments that no one wants or those that are completely worthless.