Every trader has their favorite setups, angles and go-to’s. One of mine is, for lack of a better expression, the “counter trade.” As I define it, I take an index exchange-traded fund (ETF) that looks dreadful to me technically. Then, I try to find some stocks within it which look promising for gains.
My objective is typically to buy an inverse ETF or put option on the index, while buying the stocks within that index which have the best shot to produce gains. My time horizon is weeks, maybe months. And while it is not always easy to find those standouts, when I do, it is well worth it.
