Falling knives

Anyone else here liked trading them?

 

Depending on the reason it's dropping I trade them for the bounce.
But it can be very risky

Don

 

anyone else? I am to the point where I trade them exclusively.

 

yeah. when there are so many stocks overextended like recently, and not many new breakouts, i will take a bounce if the indices go along with it.

 

i love falling knives too, but i dont spot them often enough, how do you find them?

 

haven't been finding too many lately. As a result, I am looking to get into emini trading when i don't have a falling knife positions.

I monitor the markets throughout the day for FK's because they sometimes don't show up on end of the day scans.

Edit: I usually hold FK's for multiple days (at least two days with $1 profit target). 2000-5000 shares depending on price action.

 

you, my friend, are CRAZY!

 

You haven't traded them long enough. By far, this is the most low risk/reward method I have utilized for last six years.

 

Of course, I understand that comment. But think about this...if 90% of traders really fail,you need to do what 90% are not doing. Obviously if you trade the way everyone else does u will fail.

Also, i don't blindly buy a stock because it's falling. It's price action, a couple of technicals, some fundamentals and institutional activity. I don't get trades everyday and sometimes 1-2 weeks with no activity.

 

Yes, especially intraday overreactions and the herdz inability to disseminate news quickly and accurately.

It goes without saying it can be deadly if you're wrong.

I exercise alot of caution with these.