Last Updated on: 2nd February 2021, 04:13 am
Fading is a trading technique in which a trader assumes that a rapid upward movement is overdone and takes a short position on a possible reversal.
This technique can be very risky in trending markets because going against a strong trend reduces the probability of profitability.
This technique can be potentially rewarding in range bound markets because a strong resistance level has been established, increasing the probability of future resistance and reversals at that level.
Vincent Nyagaka is a Professional Trader, Analyst & Author. He has been actively engaged in market analysis for the past 7 years. He has a monthly readership of 100,000+ traders and has taught over 1,000 students since 2014. Vincent is also an experienced instructor and public speaker. Check out Vincent’s Professional Trading Course here.