The buy on the dip strategy explained


By Steve Sosnick, Chief Strategist, Interactive Brokers

Steve Sosnick explores the trading rationale behind the buy-on-the-dip strategy.

When the US Federal Reserve has a dovish monetary policy or a stock is on a long-term up trend, buying when the stock market has a down day can be a profitable long-term strategy.

That said, there are caveats. As Sosnick tells it: “That’s a strategy that works really well, until it doesn’t.”




Photo Credit: Pictures of Money via Flickr Creative Commons

The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR or Interactive Advisors to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.



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