Fading classical trade setups

Discussion in 'Technical Analysis' started by jbob, Aug 22, 2005.

  1. jbob


    Does anyone here successfully fade (or trade against) classical trade setups/patterns, ect... For example, divergences are thought to signal a possible reversal. However, they fail so frequently, especially when countertrend to the high-time frame trend, that I wonder if you could use them for trade entry. The rationale is that you need someone to hold the bag to offset your entry and why not hand it over to the newbie that just read their first TA book that preaches about divergences. The same for go for any abuse of the various technical indicators--ie overbought/os on stochatics, MACD crossover, ect..... Any thoughts on this issue.
  2. Ju got it mang.
  3. You just might be on to something.. the next step is to find an approach that keeps you in front of the natural seller or buyer when the market maker and/or specialist starts the price discorvery proccess.

    good luck, but I feel you are on the right track.
  4. yeah why not.. not when the offer is in the proccess of stepping down, but when the size is gone, and you send a 300 share market order to see if they are still there. Thats not a bad fade trade. High probability of liquidity bids, showing up below you. Also there are other factor, like amount of divergence and trend so I would say Diamond you loaded that statement pretty well for the guy.

  5. Babak


    bull traps are nice (MESA)