Buying the Dip Explained

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2 years ago

Buying the dip" is a phrase we hear all over the crypto community.  This basic investment strategy doesn't mean going all in when a crypto value is lower than normal, but rather averaging in as it goes down and/or buying after it settles out.  This strategy is much safer to use during a bull market or when the market is stagnant.  This is because the general trend is either going to continue up or sideways.  During a bear market, the general price trend is down and will most-likely continue to fall.

There's a few ways to include yourself in buying the dip alongside the rest of the market.  You can buy incrementally as the price goes down, creating an average position and setting your aim to buy more as (or if) the price decreases further.  You can wait until the price settles and, perhaps, show signs of recovering... buying at that point.  You can also set your buy orders at lower prices and let them fill over time.  Setting buys just before historic support levels, large "buy walls", and psychological levels is an especially good strategy.  Prices will tend to do at least a quick bounce off of these levels and there should be a decent margin for profit.

This takes patience, but can reap great rewards if you play your cards right.  Taking a look into the history of the value of your assets can give you an estimate on how the market will be reacting in the future.  This is always a risk as the crypto market is highly volatile.  Although volatile, it's always good to keep an eye out on when the market dipped, why it dipped, and how it recovered afterwards.

 

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