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Super Street Fighter IV/Game Systems/Counter Hits
Whenever you strike the opponent during the Startup Frames of their moves, you will score a Counter Hit. Whenever you land a Counter Hit, you will earn a damage bonus. Whatever the damage that was going to be done by that hit will get a 25% boost. So if you hit the opponent with a move that does 100 damage, as a Counter Hit it would do 125 damage. But keep in mind that if you continue to combo the opponent after that first hit, only that first hit will gain the damage boost. The rest of the hits will do normal damage.
Counter Hit Benefits
Not only do you get more damage, but more importantly, your move will get an additional bonus to the Hit Stun the move causes. For Light Attacks, you gain an extra 1 frame of Hit Stun. For Medium and Hard Attacks, you gain a 3 frame Hit Stun bonus.
It's this latter bonus that turns out to be really important. While 3 frames, which equates to only 1/20th of a second, doesn't sound like much, it's actually a fairly significant amount. It opens up a lot of combos that are not possible without Counter Hits, so high level play has actually evolved to use setups to fish for Counter Hits that allow the player to land more damaging combos (see Frame Traps section in Advanced Techniques and Concepts).
One thing that has helped with taking advantage of Counter Hits is that the very instant you connect one, the words "Counter Hit" appear under your character's name almost instantaneously. It actually is a very good trigger to react to. If you ever press a button and are looking for a Counter Hit to react to, after hitting your button, do not look at the characters anymore, look for the "Counter Hit" message to appear.
For example, on Counter Hit, Cammy's Crouching Hard Punch can link into her Gyro Drive Smasher. So as soon as you hit Crouch Fierce, stare right under Cammy's name. You can react to the words appearing and activate the Ultra if you land the Counter Hit. And, if it is just a regular hit, not seeing the words will let you know not to let the Ultra rip.
You can even practice this very easily in Training Mode thanks to the Counter Hit option in the Training Menu. You can turn Counter Hits "On," "Off," or -- and this is the important one -- "Random." By setting it to random, it's very easy to practice fishing for and properly reacting to Counter Hits.
Aerial Counter Hits
If you Counter Hit someone out of the air, the only added benefit you get is the extra damage. Since there is no Hit Stun in the air, there isn't any Hit Stuns to increase.
Counter Hit Exceptions
Projectile moves only reward you a Counter Hit if you hit the opponent before the Projectile is produced. Some moves cannot be Counter Hit at all because invincibility frames cover up all of the Startup Frames. Thus, the move can never be hit in Startup. Zangief's Double Lariat and Rufus's EX Messiah Kick are two examples of this.