"The term is commonly used in phrases like, "don't try to catch a falling knife," which can be translated to mean, "wait for the price to bottom out before buying it." A falling knife can quickly rebound - in what's known as a whipsaw—or the security may lose all of its value, as in the case of bankruptcy." (Investopedia)
"A falling knife refers to a sharp drop, but there is no specific magnitude or duration to the drop before it constitutes a falling knife.
A falling knife is generally used as a caution not to jump into a stock or other asset during a drop.
Traders will trade on a sharp drop, but they generally want to be in a short position and will use technical indicators to time their trades."
(Investopedia)
Best,
Dr. Moshkelgosha M.D
DISCLAIMER
I’m not a certified financial planner/advisor, a certified financial analyst, an economist, a CPA, an accountant, or a lawyer. I’m not a finance professional through formal education. The contents on this site are for informational purposes only and do not constitute financial, accounting, or legal advice. I can’t promise that the information shared on my posts is appropriate for you or anyone else. By using this site, you agree to hold me harmless from any ramifications, financial or otherwise, that occur to you as a result of acting on information found on this site.
Reference Article:
https://www.investopedia.com/terms/f/fallingknife.asp#:~:text=The%20term%20is%20commonly%20used,the%20case%20of%20a%20bankruptcy.
"A falling knife refers to a sharp drop, but there is no specific magnitude or duration to the drop before it constitutes a falling knife.
A falling knife is generally used as a caution not to jump into a stock or other asset during a drop.
Traders will trade on a sharp drop, but they generally want to be in a short position and will use technical indicators to time their trades."
(Investopedia)
Best,
Dr. Moshkelgosha M.D
DISCLAIMER
I’m not a certified financial planner/advisor, a certified financial analyst, an economist, a CPA, an accountant, or a lawyer. I’m not a finance professional through formal education. The contents on this site are for informational purposes only and do not constitute financial, accounting, or legal advice. I can’t promise that the information shared on my posts is appropriate for you or anyone else. By using this site, you agree to hold me harmless from any ramifications, financial or otherwise, that occur to you as a result of acting on information found on this site.
Reference Article:
https://www.investopedia.com/terms/f/fallingknife.asp#:~:text=The%20term%20is%20commonly%20used,the%20case%20of%20a%20bankruptcy.
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