Fakey Trading Strategy | Fakey Trading Setup Explained

This fakey trading strategy is based on the fakey trade setup.  If you don’t know what a fakey setup is or what it looks like, then you will  learn that in here.

The Fakey Trade Setup is being popularized by Nial Fuller, an Australian professional forex trader over at www.learntotradethemarket.com

You will also learn about the variation of the fakey setup below.

Now, what you will read here are my interpretation of the fakey trading strategy & setup  and it may not be similar to what you may read or understand out there but I think it will come pretty close.

Lets get started.


Definition Of Fakey Trade Setup

Here’s what Nial Fuller had to say about the Fakey Trade Setup:

“Often times the market will appear to be headed one direction and then reverse sucking all the amateurs in as the professionals push price back in the opposite direction. This can set off some pretty big moves in the Forex market”

There are two types of fakey trade setups:

  1. bullish fakey trade setup
  2. bearish fakey trade setup

A bullish fakey trade setup forms when a market is in a downtrend for a while and if it forms in levels of support, it should be considered a bullish reversal signal and you should be looking to buy.

A bearish fakey setup forms when a market has been in an uptrend for a while and if the bearish fakey forms in levels of resistance, it should be considered a bearish reversal signal and you should be looking to sell.


The Ideal Fakey Trade Setup and Its Variation

This figure below shows you the ideal fakey trade setup and its common variation.



In an ideal fakey trade setup you will have 3 main things at that happen in the following order:

  1. An Inside bar pattern forms.
  2. then next candle does a breakout of the high/low of the inside bar pattern but that break happens to be false.
  3. that breakout candle either closes within the shadow of the inside bar pattern which also means that for a bullish fakey trade setup, the breakout candle has to close above the high of the inside bar candle or the inside bar pattern itself.  Similarly but opposite for a bearish fakey setup, the false breakout candle has to close below the low of the inside bar candle or inside the shadow of the inside bar pattern itself.


Where Do You Expert Fakey Trade Setups To Form On Your Charts?

If you want to be a die-hard fakey trade setup fan, it is important to know the key levels were you need to look to spot fakey trade setups.

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The following in my opinion are good levels to look for:

  • obvious support and resistance levels/zones (the key word here is “obvious”)
  • fibonacci retracement levels, the main one being the 61.8% level
  • when price touches trendlines as well as price channel trendlines.

These are the key price levels you should be watching to see if the fakey trading setups form.


What Timeframe Should You Look For The Fakey Trading Setup?

Fakey trading setups, can form in any timeframe. But the big price moves and so the chance of more bigger profits happens on larger timeframes.

So what are the best timeframes to trade the fakey setup?

In my opinion: any timeframe from 1hr and upward to daily.


How To Trade The Fakey Setup (The Trading Rules)

The trading rules are really straight forward.

  • First you need to have an idea of the structure of the market, is it trending or going sideways.
  • Based on this, you will then identify price levels where the market has the potential to reverse
  • and in the process of doing that, a fakey trading setup may form to give you the clue that the market may be changing direction.
  • Take The Trade.

Buying Rules

  1. If a fakey pattern involves a bullish pin bar/hammer, you can either buy at market when the bullish pin bar closes. Or place  your pending buy stop order at least 2 pips above the high of the pin bar and let the breakout activate your pending order.
  2. Place your stop loss at least 2 pips below the low of the entire fakey pattern setup.


Selling Rules

  1. just do the exact opposite of buying.
  2. similarly, place your stop loss at least 2 pips above the highest point of the entire fakey pattern setup.


A Few Examples Of Fakey Trade Setups

(Image Sources/Links Given) For Further Reading If You Choose To check them out.

#1: A bullish fakey setup on a market in an uptrend.


Image result for fakey trade setup

Image Source: Learn To Trade The Market Nial Fuller Link:http://www.learntotradethemarket.com/forex-trading-strategies/price-action-setups-pin-bars-fakeys-inside-bars

#2: Another Bullish Fakey Trade Setup In an uptrend market.


Image Source: Learn To Trade The Market (Nial Fuller) Link:http://www.learntotradethemarket.com/forex-trading-commentary/forex-commentary-eurusd-4hour-fakey-setup-3-31-10

#3: An Example Of A Bullish Fakey Trade Setup Based On A Trendline Setup



Advantages of The Fakey Trading Strategy

  • less clutter on your chart because this is a naked price action trading strategy.
  • has potential to get you into a trade at just about the rigth moment when the trend is changing or jumping into a trade at as price retraces.
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Disadvantages of The Fakey Trading Strategy

  • for a beginner forex traders, it can be a bit confusing at first.
  • there are ideal fakeys and those fakey variations and the fakey variations can be hard to spot if you don’t really know what exactly to look for.
  • the fakey trading strategy is not the forex holy grail, as with all other  forex trading strategies , there will be times you will have false price moves and you will suffer trading loses.


Further Reading Resources

To read more about the fakey trade setup, head over to Nial Fuller’s website link below:

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