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Fading
From Forexpedia
| Definition:
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.
