What Is a Falling Knife – And Why You Shouldn't Catch It 🔪⬇️
In trading, a "falling knife" means an asset that's dropping fast. The idea is simple: trying to buy while the price is crashing is like trying to catch a knife mid-air. Most of the time, you get hurt and buy too early while the price continues to go down.
🙅♂️ The same rule applies in real life. If someone drops a knife in the kitchen, you don't stick your hand out and grab it. You step back, let it fall, and only pick it up safely once it stops moving. Same with trading — smart traders don’t rush into a freefall.
Instead of guessing the bottom, it's better to wait for signs that selling pressure is slowing down. Look for 👇
⏺A base forming on the chart (sideways movement after a drop)
⏺Higher lows starting to appear
⏺Decreasing volume on sell-offs
⏺Strong support zones holding after a retest
Patience matters. Bottoms are confirmed with time, not hope. Let the market stabilize first, then make your move and always remember about danger of high leverage trading.