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Alison Heyerdahl
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Alison Heyerdahl
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Alison Heyerdahl
Head of Content
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Author
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Chris Cammack
Partner Manager and Financial Writer

<p>Chris manages the relationships with our partners to provide our users with the best Forex trading experience possible. Chris has 15+ years of experience in research, editorial and design for political and financial publications. His background has given him a deep understanding of international financial markets and the geopolitics that affect them.</p>

Learn more about Chris Cammack

Fade a Move Strategy

Reading time: 3 min | Intermediate | Trading Strategy

Fading a move is the unorthodox strategy of trading against the prevailing trend of the market, and can be very profitable with the right market conditions.

Fade a Move Strategy

Using this strategy, a trader will sell expecting the momentum to fade away while in an uptrend, and a trader will buy with the expectation that the move will fade away and reverse while the market is in a downtrend.

There are two main components of a Fade a Move Strategy.

Don't Fade Strong Market Trends

Fading strong market trends is a losing game and a receipt for disaster. Fading a trend successfully is not easy because trends can continue to stay in motion for long periods.

Fade Sudden and Explosive Spikes

What we want to fade out are sudden or explosive moves or spikes in price that are unsustainable and lack the momentum to continue.

How Fade A Move Strategy Works

Most of these spikes in price happen on an intraday basis, so using a day trading strategy to fade spikes in price is best.  Fading requires having a contrarian approach, and many of the most prominent hedge fund managers promote themselves as being contrarian traders.

Fade a Move Conditions & Strategy

Condition 1

The primary assumption behind fading strategies is either that the trend is overbought/oversold or the move lacks the momentum to continue.

Consolidating or ranging market conditions are the ideal trading environment to fade spikes in price. First, a trader needs to find a ranging market. Luckily, the market spends most of the time in ranging conditions, which means that this trading strategy can be used frequently.

GBP/USD trading range right before the London session opening bell

GBP/USD trading range right before the London session opening bell

The above chart highlights the GBP/USD trading range right before the London session opening bell. For this strategy to work, a trader does not need to guess in which direction the market will spike, and instead only watch the market move naturally and react afterwards.

Condition 2

The second condition to be satisfied to fade a move successfully is that the spike in price needs to happen from significant technical level (support/resistance; swing high/low; psychological numbers).

In our case, the GBP/USD spikes down to the support level and quickly start fading away. You can either buy right away when the support level is hit or you can use a more conservative entry strategy as follows:

  1. Wait for the market to start fading and pulling away from the support level.
  2. Mark the height of the candle on your chart that started the sell-off.
  3. Place a buy limit order to go long once that high is broken.

Keep Risk Contained

When fading a move, keep your risk contained to prevent potential losses. Don’t forget to use a protective stop loss to minimise the possible loss in case the trade goes wrong.

  1. After your order gets triggered, place your protective stop loss below the support level. You can add a buffer of 5-10 pips to protect against possible false breakouts.
  2. The next thing you need to establish is an ideal place to take profits, which should always be at least two or three times more than your stop loss.

Conclusion

Fade trading means waiting for the initial spike in price and only trade what happens after it. The first spike is usually a knee-jerk reaction that is designed to fool many traders into jumping into the market in the wrong direction.

Even though fade trading might seem to be risky because you’re trading against the trend, it can be extremely profitable if appropriately used.  This is because the market spends most of the time consolidating which is where most of the spikes in price happen.

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Meet the Experts Behind Our Unbiased Reviews

Chris Cammack

Partner Manager and Financial Writer

Chris Cammack

Chris Cammack is partner manager and senior financial writer at FxScouts, specialising in broker relations and forex market analysis. As the former Head of Content (2019–2024), he set editorial standards for all content published at FxScouts, including broker reviews, broker comparison pages and education.


With over a decade of experience in editorial management and partner relations, Chris builds and maintains our relationships with our partners to provide the best Forex trading experience for our users.


He also co-hosts the “Let’s Talk Forex” podcast with Alison Heyerdahl, where he explores trading strategies, industry news, and macroeconomic trends to help traders navigate the markets with confidence.

Alison Heyerdahl

Head of Content

Alison Heyerdahl

Alison joined the team as a writer in 2021. She is the Head of Content for FxScouts. She has a medical degree with a focus on physiotherapy and a bachelor's in psychology. However, her interest in Forex trading and her love for writing led her to switch careers. She has a passion for Forex trading and over a decade of editorial experience researching Forex and the financial services industry, producing high-quality content. She hosts a weekly podcast, "Let's Talk Forex", alongside Chris and has produced over 100 Forex educational videos for the FxScouts YouTube channel. She also writes weekly technical analyses and has tested and reviewed over 120 Forex brokers.

Ida Hermansen

Financial Writer

Ida Hermansen

Ida is a financial writer with a degree in Digital Marketing and a strong background in content writing and SEO. Her expertise extends beyond marketing and writing, with a keen interest in cryptocurrencies and blockchain networks. Ida's passion for crypto trading sparked a deeper fascination with Forex technical analysis and price movement. She is continually expanding her knowledge in Forex trading, staying informed about the latest trends and identifying the best trading environments for new traders.

Stefan de Clerk

Financial Writer

Stefan de Clerk
The newest member of our team, Stefan has a degree in Marketing and more than a decade of experience writing quality content in both finance and tech. Stefan's deep fascination with how factors like geopolitical events, big data and market sentiment influence the financial markets drives his passion for Forex trading. He believes that if you want to feel the pulse of the world economy, trade Forex, and if you want to trade Forex, you need well-researched, unbiased and objective information.