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2. Intermediate Strategies

Fading Trading Strategy

Fading in the terms of forex trading means trading against the trend. If the trend goes up, fading traders will sell expecting the price to drop and visa-versa.  Unlike other types of trading which targets the prevailing trends, fading trading requires to take a position that goes counter to the primary trend. The main assumptions on which fading strategy is based are:

  • Securities are overbought
  • Early buyers are ready to take profits
  • Current buyers may appear at risk

Note: “Fading the market” can be very risky and requires high risk tolerance!  

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