my investing muse - 3 days rule for "buy the dip"
in the market, there is a "3 days rule" that advises the following:
If a stock suffered a big drop in a single day (high single digit or more in percentage %), it is usually advised to consider buying after 3 days.
I have recently recommended a BAD (buy AFTER dip) trading strategy over buy the dip (BTD). this may help us to avoid catching a falling knife instead.
with $Facebook(FB)$dropping 22% post trading hours, the impact has spreaded to other social media businesses like $Twitter(TWTR)$, $Pinterest, Inc.(PINS)$& $Snap Inc(SNAP)$which posted post market hours drop of over 8%.
this is likely to continue for few days and let us monitor. it is better that we make lesser profits than buying a price that is still falling. for those who are using technical charts, let us set price alerts at the support and resistance levels using 1 Day chart for price action. if we are prudent and patient, we can better avoid false signals and hopefully stand to gain better profits.
Let us not forget to do our due diligence and qualify the company with good moat and sound financial fundamentals at good price first
here is wishing all a healthy and prosperous year of the Tiger.
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