What is a ‘Fade’
A fade is a contrarian investment strategy used to trade against the prevailing trend. “Fading the market” is typically very high risk, requiring the trader to have a high risk tolerance. A fade trader would sell when a price is rising and buy when it’s falling. Also known as “fading”.
2. In a dealer market, it is the failure of a dealer to honor a quote when a customer or another dealer wants to trade.
Explaining ‘Fade’
1. An example of fading would include buying on a dip in price and selling when the price rallies. Often it’s a rather volatile strategy, but one which offers the potential for significant short-term gains. It requires little in the way of complicated analysis but the risk that trend continues is always present.
2. For example, if a better bid is posted on another exchange for a security and a market maker is unwilling or unable to match it for a client order, the market maker may offer to trade with the other market maker (with the better price). The market maker offering the better price must accept the offer and trade at the price offered or adjust the bid price.
Further Reading
- The State Credit Worthiness" Should Fade out of the State Bank [J] – en.cnki.com.cn [PDF]
- Instructional leadership and the school principal: A passing fancy that refuses to fade away – www.tandfonline.com [PDF]
- Secure the shadow ere the substance fade – www.tandfonline.com [PDF]
- Gimme shelter or fade away: the impact of regional entrepreneurial ecosystem quality on venture survival – academic.oup.com [PDF]
- Does the price impact of flooding fade away? – www.emerald.com [PDF]
- Fade out/fade in: dead 1920s and 1930s Hollywood stars and the mechanisms of posthumous stardom – www.tandfonline.com [PDF]
- A Brief Simulation Model of China's Active Fiscal Policy——A Scenario Analysis of Continuity, Fade out and Strengthener – en.cnki.com.cn [PDF]
- Homocysteine levels and risk of essential hypertension: A meta-analysis of published epidemiological studies – www.tandfonline.com [PDF]
