Buy A Bounce

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DEFINITION of 'Buy A Bounce'

A strategy that focuses on buying a given security once the price of the asset falls toward an important level of support. Traders who "buy a bounce" attempt to profit from a short-term correction or "bounce" off of the identified support.

INVESTOPEDIA EXPLAINS 'Buy A Bounce'

In order to use this strategy most effectively, a trader has to be sure that he or she is able to identify a valid level of support. Some traders may wish to enter a position before the signs of a bounce off of a support level, but generally this is a high-risk strategy and can result in devastating losses. Most traders will want to confirm a bounce off of a support level by using a combination of other technical indicators before entering a position.

RELATED TERMS
  1. Indicator

    Indicators are statistics used to measure current conditions ...
  2. Confirmation

    1. The occurrence of two or more indicators corresponding with ...
  3. Trendline

    A line that is drawn over pivot highs or under pivot lows to ...
  4. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  5. Support (Support Level)

    The price level which, historically, a stock has had difficulty ...
  6. Trend Analysis

    An aspect of technical analysis that tries to predict the future ...
RELATED FAQS
  1. How should orders be placed when trying to buy a bounce on a stock?

    Buying a bounce a strategy designed to purchase a stock at an advantageous price when a temporary retracement occurs in the ... Read Full Answer >>
  2. How do traders implement the Buy a Bounce Strategy?

    "The law of action and reactions seems to be a fact that a primary movement in the market will generally have a secondary ... Read Full Answer >>
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