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  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>A <strong>falling knife</strong> is a security which has a steep decline with virtually no counter move on the way down.&nbsp; Falling knife stocks have been a vice for a number of traders for a long time.&nbsp; There is something within a trader\'s nature that forces him to step in front of this freight train.&nbsp; The issue with buying a falling knife is that they are dropping like a rock for a reason.&nbsp; Stocks fall at an accelerated rate right before a bankruptcy or after a horrible earnings report.&nbsp; The odds of being able to pin point the exact <a href=\"/technical-analysis/rounding-bottom.html\">bottom</a> of a falling knife are slim to none.</p><h2>How to Catch a Falling Knife</h2><p>Becoming a winning trader is about having patience.&nbsp; Catching a falling knife requires enormous patience and control of one\'s emotions.&nbsp; A classic method for buying a stock that is falling swiftly is to wait for <a href=\"/technical-analysis/climactic-volume.html\">climatic volume</a>.&nbsp; A pickup in volume of 500% or more will often flush out the strongest of <a href=\"/day-trading/weak-longs.html\">longs</a>, thus leaving no one left to sell.</p><h2>Example of a Falling Knife</h2><p>The summer months of 2008 have proved brutal for the financial markets.&nbsp; Below is the chart of Freddie Mac (FRE), which is a perfect example of a falling knife as it fell from $25 to under $4 in less than a month.&nbsp; Notice how the <a href=\"/technical-analysis/volume-analysis.html\">volume</a> spike preceded a 100% reversal off the bottom.</p><p><img height=\"365\" alt=\"Falling Knife\" width=\"436\" src=\"/files/u1/Falling-Knife.png\" /></p>', created = 1576332999, expire = 1576419399, headers = '', serialized = 0 WHERE cid = '1:68c2a8affca44e4d488a4b67725e4c45' in /var/www/html/mysmp/includes/cache.inc on line 109.
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  • user warning: Table './mysmp_drupal/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide to navigating through the markets.</p><p>Tim is in the Timers Digest Top 10 Rankings for his newsletter and is the Author of \"The Secret Science of Price and Volume”. Ord also contributes to the Stocks &amp; Commodities Magazine.</p>', created = 1576332999, expire = 1576419399, headers = '', serialized = 0 WHERE cid = '1:2fda152348bc4ae73408bf0b82608e9a' in /var/www/html/mysmp/includes/cache.inc on line 109.
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Falling Knife - Stocks

A falling knife is a security which has a steep decline with virtually no counter move on the way down.  Falling knife stocks have been a vice for a number of traders for a long time.  There is something within a trader's nature that forces him to step in front of this freight train.  The issue with buying a falling knife is that they are dropping like a rock for a reason.  Stocks fall at an accelerated rate right before a bankruptcy or after a horrible earnings report.  The odds of being able to pin point the exact bottom of a falling knife are slim to none.

How to Catch a Falling Knife

Becoming a winning trader is about having patience.  Catching a falling knife requires enormous patience and control of one's emotions.  A classic method for buying a stock that is falling swiftly is to wait for climatic volume.  A pickup in volume of 500% or more will often flush out the strongest of longs, thus leaving no one left to sell.

Example of a Falling Knife

The summer months of 2008 have proved brutal for the financial markets.  Below is the chart of Freddie Mac (FRE), which is a perfect example of a falling knife as it fell from $25 to under $4 in less than a month.  Notice how the volume spike preceded a 100% reversal off the bottom.

Falling Knife

Tim Ord
Ord Oracle

Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide...

Tradingsim.com
Day Trading Simulator

Tradingsim.com provides the ability to simulate day trading 24 hours a day from anywhere in the world. TradingSim provides tick by tick data for...

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