Ever heard the above phrase before? You have, you just do not know; a typical example is the period Bitcoin lost its value from $60,000 to $30,000, but now running at $31,000- $35,000. Imagine you bought some at $30,000 and now it’s $32,000, you’d be $2000 richer, incredible right?
"Buy the dip" is a common phrase investors and traders use after an asset has declined in price in the short-term. After an asset's price drops from a higher level, some traders and investors view this as an opportunity to buy more of an asset.
When an investor buys an asset after a drop, they are buying at a lower price, hoping to profit if the market rebounds.
ACCESS BANK share price is struggling and is down 10% from N10.00 (the price at which you bought it). You believe that this weakness is just temporary, and that the price will eventually rebound to greater heights. You decide to "buy the dip" and purchase more ACCESS shares every time that it drops a certain amount. If the price eventually soars to N12.00 you have made a profit buying the dip.
However, the danger of "buying the dip" is not being able to differentiate between a temporary drop in price and a warning signal that prices are about to go much lower. Many people have gone broke "buying the dips", and you should always be careful when doing so.
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