Trend fading trading is a contrarian strategy that involves trading in the opposite direction of the major prevailing trend. A trader who fades the market Sells when the dominant direction of the market is up and Buys when the overall direction of the market is down. This trading strategy can be high risk and requires experienced traders that are willing to take the possible greater losses that can come with the strategy.
As an example trend fading can include buying on a dip in price and selling when prices rally upwards.
Before trading this strategy it is important to consider factors such as your risk tolerance as well as how much capital you can afford to lose in the event that the market moves against your trading positions.
Disclaimer – Futures, CFD, Margined Foreign Exchange trading, Warrants, Options and Spread Betting all carry a high level of risk to your capital. Only speculate with money you can afford to lose. Futures, CFD, Margined Foreign Exchange trading and Spread Betting may not be suitable for all customers, therefore ensure you fully understand the risks involved and seek independent financial advice if necessary.
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