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  1. Beginner
    Early Stages For Beginners
    8 Topics
  2. Forex Terminology
    11 Topics
  3. Margin & Leverage
    2 Topics
  4. Intermediate
    Identifying Scams
    2 Topics
  5. Brokers for Beginners
    5 Topics
  6. Technical Analysis
    13 Topics
  7. Advanced
    Using Indicators
    6 Topics
  8. Technical Analysis (Part 2)
    8 Topics
  9. Market Structure
    5 Topics
  10. Fundamental Analysis
    9 Topics
  11. Completion
    Risk Management for Beginners
    8 Topics
  12. Psychology for Beginners
    7 Topics
  13. Personal Psychology Questions
    2 Topics

Counter Trend Trading / Counter Trend Lines

Many traders use Counter Trendlines as a way to enter the market, which is called: Counter Trend Trading. Whenever you see a trendline make sure you look within it, as it could help your ability to find better entries by trading the break of the counter trend line.

If the overall direction of a trend is bullish (up) you’ll be able to spot the smaller trend going down; that smaller trend is also called a pullback or retracement. This form of trading is best used to find entries when price is ready to continue in the direction of the overall trend.

You can use trendlines to follow the direction of the overall trend and use a counter trend line to follow the retracement. You are looking for a break and retest of that counter trend line to find your entry.

Common risk traders make is going against the trend and trading the counter trend. There is no guarantee when price is done retracing or if it is even ready to retrace. Trying to call it too early can lead to unnecessary losses. This requires discipline and patience. Allow price to break the counter-trend and complete its retracement before looking for entries.

In the illustration below, you can see the overall long-term trend is a DOWNTREND. Once you start scaling down to a lower time frame, you’re able to place counter trend lines and await the breakout for entries.

Counter-Trendline-Positions