Should I Continue to Catch a Falling Knife?

It seem like I'm catching a falling knife in my recent investments in A2M and APX. My current average positions in these 2 stocks are 20% and 10% down respectively. My original intention was "buy the dips". Thus, I bought at the price where I think the support was but it turned out it has not bottomed out yet The stock price continued to fall. 

I think catching a falling knife is fine especially for investors who usually invest at the longer time horizon and expect the stock price will go up eventually based on fundamental analysis. When it does, catching a falling knife is not really a big deal anymore. Therefore investors usually never admit they catch a falling knife. They buy at a dip instead!

On the other hand, I can wait for bottom confirmation based on technical analysis before I take the first position. However, I'm not 100% conformable with this strategy with the following reasons:

  • I will miss the buying opportunity at lower price
  • I cannot time the market accurately 
My strategy is buy at where I think the support is. If it goes up, I will hold or potential wait for pull back to enter again. However if it drops after my first buy, I will buy at the next support until it is bottomed out eventually. When there is a sign of uptrend reversal (i.e uptrend), I will buy again at the next pullback. 

I think the bottom line is I"m a investor or not trader. So I am comfortable with playing with knife and will continue to do so.



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