Buy A Bounce

AAA

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. Confirmation

    1. The occurrence of two or more indicators corresponding with ...
  2. Indicator

    Statistics used to measure current conditions as well as to forecast ...
  3. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  4. Trend Analysis

    An aspect of technical analysis that tries to predict the future ...
  5. Support (Support Level)

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

    A line that is drawn over pivot highs or under pivot lows to ...
Related Articles
  1. Charting Your Way To Better Returns
    Active Trading Fundamentals

    Charting Your Way To Better Returns

  2. Trade On Support For The Best Exit Strategy
    Active Trading Fundamentals

    Trade On Support For The Best Exit Strategy

  3. Day Trading Strategies For Beginners
    Trading Strategies

    Day Trading Strategies For Beginners

  4. Basics Of Technical Analysis
    Trading Strategies

    Basics Of Technical Analysis

comments powered by Disqus
Hot Definitions
  1. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  2. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The ...
  6. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer ...
Trading Center