“Falling Knives”

Market Terms

We don't know everything about the markets.  We're just devoted to learners.  Taken from those smarter than ourselves, here's how we define “Falling Knives”.

A shortened version of the colloquial term “don’t try to catch a falling knife.”  When it comes to trading, this term translates to “wait for the price to hit a bottom before buying it.”  There is no defined amount a stock must fall in order for it to be considered a falling knife.  Many traders will attempt to take advantage over a falling knife situation, but often in the form of a short position with the assistance of technical indicators.