Getting Pips As A Forex Trader Or A Fader?
Foreign Exchange expert answers the issue.
The differences between traders and faders are mostly their market momentum and entrance. A trader will wait for the market to get momentum in some direction and then get in to ride some of that movement before it ends. A fader will use a solid understanding of cost shields to determine the end of a move and buy/sell in the other direction to get the retracement. Traders will usually try to live by the mantra, trade with the trend, the trend is your friend which is not a bad plan, and you can believe me or not, I think you can be a fader and still use the trend.
If we were to ask you the trend that we were in right now on a certain pair, you probably couldnt answer and it would be a very unfair question. This question would be unfair because many times we are in an upward trend, of a downward trend, and then of another upward trend etc. The direction of the trend just depends on the scale of your trade. A fader would trade with the trend by finding the turning points as they hit the bottom of an upward trend. Simply taking trades off of the bottom trend line of an upward trend does not make high probability trades.
A seasoned trader incorporates many other possible tools and factors to determine the strength of a price level. For example, let's say the cost was getting to the bottom trend line of an upward trend, the trader would notice that the apparent point where the trend ine intersects would be on a psychological shield of 00, and also happened to be the 62% Fibonacci retracement level of the past upward move. Noticing both these conditions, the trader has a much higher probability of making that trade.
One of the benefits of fading is that as soon as you fine tune your entries you may have a smaller effective stop loss, thereby letting yourself trade more lots and not risk more of your account. So when you are right you make greater amounts of money for every pip. Another benefit is that you may place your stop losses outside of where the currency has been recently; above resistance, below support or in back of some barrier of price. If youre putting your stops at price levels that the currency has been recently then there is not much keeping it from going there again, it is still in its comfort zone. Most of the techniques that I have created and trade are based on the fader style of trading. When I do lose, they are small losses and easy to win. But, when I win, I usually get a positive risk/reward ratio and pull a healthy profit from the market.
About the Author
Jesse Fisher likes composing articles for his customers which includes Transamerican Medical, a company that resells Philips Medical equipment and parts. See also Imaging Centers online directory. (You may republish this article online IF all links are kept intact.)
Tell others about
this page:
Comments? Questions? Email Here