Buying dips actually reduces risk?

Discussion in 'Trading' started by crgarcia, Oct 12, 2007.

  1. When buying just before the close, the same day of the plunge.
    To sell the next day?

    Even on corrections as Feb 27, and the 1987 crash, it bounced back the next day...
  2. The week before the '87 crash had several "plunges". What if one had bought the Friday before and held on throughout Monday?

    That said, buying dips in an uptrend and selling pops in a downtrend can be effective strategies with an excellent risk/reward ratio.

    But one MUST control exposure and must NOT average down using margin or leverage. On the other hand, buying and holding an index fund and adding on dips while planning to hold for many, many years is different.