Buying The Bounce After The Dips
Buying the dip is dangerous if you don’t know when it stops going down. The bounce after the dip tells you when a potential low was found.
The market has been selling off.
When do you buy when the price keeps falling?
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You may have heard about “buying the dip.”
I think that’s dangerous because you don’t know when the price will stop falling.
If you bought the dip on Thursday last week, the price fell further down on Friday.
The price could have continued falling on Monday (yesterday).
Another approach to follow is to buy the bounce after the dip.
The price tends to find a low (or support) when it bounces after a sell off.
Yesterday (Monday) we saw the price fall hard at the open, but it bounced up.
Today, the price continued to bounce.
Yesterday was a day to buy for aggressive investors.
Today is a safer day to buy for more conservative investors.
I started to buy some ETFs that are generating me about 20% in passive income annually.
I have a mix of ETFs that generate about 10%, 20% and 30% in yearly dividends.
So far I have shared about the 10% ones.
What’s great about these 10% ETFs is they generate tax-free income too.
Learn more about these ETFs by reading this post.
Turn the Stock Market Into Your Personal ATM: Unlock Tax-Free Passive Income!
I’ve been investing in a group of stock tickers that give out over 10% in dividends every year.
Be cautious about buying new positions.
The market tends to have three down turns in a bear market from what I have noticed.
So far we have seen two down turns.
Hopefully this is the last but don’t be surprised if we see another one in a few weeks.
We will see another down turns if the price finds resistance at the 50-day and 200-day moving averages.
(Resistance means the price bounces down after reaching a price level.)
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Disclaimer: The author of this post is not a financial advisor. The information provided herein is not financial advice and should not be construed as such. This content is intended solely for educational purposes. The author will not be held liable if you decide to used this material as a basis for any financial decision-making. Investing involves risk, including the potential loss of your invested capital. Only invest what you are willing and able to lose.