thanks, here's the example, we could expand from here... https://elitetrader.com/et/threads/...unce-same-as-catching-a-falling-knife.341332/
Investors talk about cats and knives. Traders don't talk about cats and knives. For traders, we'd call it as Trading a reversal ( to go up) Same as Trading a reversal ( to go down) but different from Counter Trend Trading which is same as kamikaze trading.
Jagerson is presenting the dcb as a gap trade possibility. if at the prior gap, indications are that risk reward allows a responsible entry, then a gap trader could sharpen up this tool and add it to the toolbox. Catching a falling knife, well, ... Jagerson's dcb/ gap tool, tho, if indeed the cat is dead, looks decent if it fits a traders temperment and proves up under testing, stats, etc... a with trend, continuation trade, a way to trade the pullback
%% Partly the same. BUT a dead cat bounce is worthless/dead for longs[unless you are really a bottom feeder buzzard LOL] Knives /aka falling safe, are worth something, some worth a lot/valuable. So fundamentals matter, also....................................................................................
I've traded dead cats for years. Its one of my favorite strategies that keeps on giving. I'll look at several different time-frames of the underlying, if the longer-term confirms with the shorter all the merrier. Dead-cats come in all shapes and sizes. Usually capitulation from a huge earnings gap you'll see price gap down -20% and then rally back up filling that same gap hours later. This happens all the time. Dead cats can also occur on longer time frame such as daily, weekly, even monthly where the stock can sold off extensively and the selling is exhausted. Once these shares transfer the risk completely to the upside you'll see a huge influx of volume with usually a very long wick on a candle, followed by huge buying volume and price spikes. This anomaly in the market has fasincated me for years and still does to this day.
I am a big believer in technical analysis. That said, in times of panic it doesnt seem to work very well. Thats why everyone loses in a serious bear market.
Unless you actually have a method called dead cat bounce, well tested, in my way of thinking, it be fool hardy. Risk is beyond too much.