What is Fading in Day Trading?

Thanks for asking.

The trader opposes a security’s predominant trend by purchasing when the majority is selling and offloading when the majority is buying. A winning strategy relies on investors’ overconfidence instead of market data.
Seeing most trends are controlled by facts, spotting a fade can be daunting. That’s why the method is popular among institutional investors and expert traders. This technique thrives on volatility because of the recurrent profitable corrections. Typically, an investor awaits the release of details like profits, interest rate changes, and sales projections. Though it matches different securities, fading suits the Forex market because of currency fluctuations triggered by key indicators.
Suppose a country’s trade results are higher than projected. The value of its currency against the USD will increase causing institutional investors to align their capital with the possibility of a growing currency. Algorithmic and retail traders will tag along. While attributing part of the rise to positive economic statistics, a fade trader knows increased demand also plays a role and the currency will return to its original value.