is this correct?

[wrbtrader]

Sergio,

That is not what I meant and I've never met an institutional trader that's trading to "fade retail traders". Heck, I've never heard an institutional trader discuss such. In contrast, I've heard many retail traders say or think institutional traders fade retail traders. The professional traders I know, they only talk about what the other guy (other institutions) are doing. For example, if you're a top trader or head trader at a particular firm and you start taking positions in something...word spreads fast (within minutes) and the other big boys want in too...they don't care if Joe the retail trader in his basement office is buying at some support line. In contrast, Joe the retail trader will care what the institutions are doing.

Yet, just because I've never met an institutional trader doing such (fading retail traders) doesn't imply there aren't any doing such.

Regardless, if there are professional traders watching patterns so that they know when to "fade retail traders"...that in itself would imply they're using patterns.

By the way, there's a few nice old threads here at ET in the Technical Analysis section about "fading breakouts", those trying the trade methods still said it didn't work. The point I'm making, its still using patterns.

 

[Sergio77]

Asmany studies have shown, retail is net loser. So someone is fading them, intentionally or not. Otherwise they would be net winners.

 

[wrbtrader]

I've seen lots of studies that say the reason why retail traders lose reveals any of the following reasons:

1) Lack of a trading plan

2) Undercapitalized

3) Margin abuse

4) Lack of discipline

5) Poor trade management and/or risk management

6) Wrong trading instrument

Further, I myself did a study a few years back and had 745 replies and the results were very similar to what other studies revealed above.

Retail traders getting faded was not on any top 5 list for why traders lose...maybe the top 100 list if such was ever done

There was a AHG chat room on IRC many years ago. About 8 traders went Long in Crude Oil CL futures about the same time...largest difference in their posted trade was .04

Of the 8 traders...only 2 exited the Long position at a profit (average profit of a few points...not ticks) while the other 6 exited the Long position at a loss. Based upon what I discovered in my own study involving 745 replies, I would say "trade management" had the most critical impact on the trade results in that particular situation...no fading.

A friend of mine, former broker now institutional trader says most of the retail accounts abused their margins resulting in poor risk management.

There's a few good breakout journals and s/r journals here that also validate the above too.

By the way, there's recent thread here at ET that explains why taking opposite trade positions of losing traders doesn't work and another thread in the past where someone actually faded every entry posted by a proven losing trader. Results, he too was a losing trader. There's no need for me to explain why...others have used statistics and logic to explain it in the other thread as others have done so in that trade journal many years ago.

To imply fading is a reason as if it stops at the first trader doing the fade is not logical. Simply, if it is going to be used as a reason...every trader that fades will also get faded by another trader.