If you’ve been involved with stock trading for a while you’ve probably heard the phrase, “buy the dip”. If not here’s a brief lesson.
If a stock or whatever it is you’re trading has value that is dropping in price or ‘dipping’ the suggestion is being made that you should buy more. This is “buying the dip”. The strategy here is simple, the chances of having a winning percentage using it, not so much. It all depends on a few things.
Let me preface these next few words with the obligatory disclaimer; I am not a financial advisor. My words here are a combination of facts and opinions from a person who has been successfully trading stocks and crypto on the market every single day for the last several years. When you’re done reading you can go to your resident stock expert and ask if he agrees with my assessment. It’s pretty brief and to the point. No one wants to waste their precious time these days.
When it comes to buying the dip, it doesn’t matter if we are talking stock shares, options, or crypto, you must be prepared to lose money.
Coming into any type of trade where you are buying on the way down, there is a great chance that the value may keep dipping when you think you’ve caught the bottom. Before you even get into that situation, you’ll want to know why it’s dipping to begin with.
If you are simply dealing with a total market sell off and you know you’ve got a solid pick then buying the dip may be a logical strategy. I say “may be” because in all honesty it’s all risky.
Who the hell saw the market crash that started the Great Depression before it hit? I mean besides the Morgans, Rothchilds, Rockefellers, etc who started the crash, but that’s a story for another day. Moral of this story is, many retail investors (you, me) are simply gambling everyday in the stock/crypto market. Sure the odds are better but still its a gamble none the less.
So when it comes to ‘buying the dip’ I suggest you treat it like getting dealt a hand of twin 7s in blackjack. Do you split the 7s and try your luck or take a hit with 14? That all depends you and what you are will to risk.