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Buying The Stock Market Dip

It is always exciting to buy the financial markets dips.  Price falls a bit and reaches levels where one was expecting to buy more shares and one buys.  Few weeks later, it all works out nicely beyond one's expectations.  It is all good.  One has successfully buy the dip of the stock market.

The objective of this article is to explain how one can buy the dip in the stock market without falling into the common traps of buying the dip.

Who Often Buys The Dip In The Stock Markets

Fundamental traders and investors love to buy the dip in the stock market.  Most of them are bullish market players that are always looking for a good excuse to buy the dip.  I can not blame them, but they often struggle to time the market accurately on regular basis.  Their market timing needs a boost. 

Apart from those market participants, the technical traders and investors also buy the dips.  Contrary to the fundamental investors, the technical traders who are combining the technical and fundamental analysis often buy the dip more precisely.

There is no need to think that one is useless when it comes to buying the dip.
One can still improve.

Best Time To Buy Stock Market Dip

The best time to buy the stock market dip is during the third Elliott wave. 

Learn to count waves at

It does help to learn how to use the Elliott wave principle.  Really, I believe that one will struggle a bit, if one never tries to master the Elliott wave.  Alright that is my opinion.

One counts first and second waves and the price breaks above the high of the first wave.   

Well, please highlight the channel by drawing a line that connects the lows of 1st and 2nd waves.  Then draw another line through the high of the 1st wave that is parallel to the first line.  That is it, your channel is now ready. 

To buy the dip during the third Elliott, one will wait for the price to pullback to the edge of the base of the rising channel that one has drawn. 

One is more likely to gain from buying the third wave's dips if one is a medium or long term investor.  Of course a short term market player will be more under pressure because of short term price fluctuations that cause early losses.

In a nutshell, the take away is that one is better off buying the stock market dips during the third Elliott wave in comparison to any other time.  That is all.

Stock Market Dip Buying In 5th Wave

It is highly speculative to buy the stock markets' dip during the 5th Elliott wave because of the active distribution of the smart money that is gradually cashing out during the 5th bullish wave.  I would rather adopt a short term trading and speculative investing strategy instead of buying and holding like a mad cow investor (that is a joke by the way). 

Though, one can profit from the fifth wave dips, a prudent strategy is needed even during an extended 5th Elliott wave.

First Wave Stock Market Dip Bulls

A trend that starts can still fail after the first Elliott wave when the second wave cancels it.

Therefore, one is also exposed to risks like the 5th wave stock market dip bulls.  The second wave can still cancel the 1st wave before a new first wave is put in its place.

Note that at the start of a bullish trend that is still in the first and 2nd waves stage, the market is still saturated by the bears.  Only the smartest market players are creating the new trend.  As one can see, one is at least taking a lesser risk in comparison to the 5th wave bullish investors ( better risk-reward ratio and more time to hold on).

One should not forget that the bullish trend becomes safer only after the price finds a support above the high of the first wave at the start of the third wave. 

General Rule Buying Stock Market Dips

The general rule is to buy the stock market dips in a trending phase or motive wave.
The trend is your friend so they say, but it is even friendlier during the 3rd wave.
One is looking for a strong momentum supported by a high trading volume, financials and a healthy market environment. 

Give precedence to the first dip that retests a prior high.  Also, buy the first dip above any triangle pattern instead of buying carelessly in the triangle itself.
Last point, not all stock market dips are equal.


One that buys the stock market dip in a timely fashion can grow the initial investment within five years in normal conditions.  Really to buy the dip more precisely, one ought to concentrate on the third Elliott wave.  Without a better understanding of the financial markets' trend structures, one may end up buying the wrong stock stock market dip

After a valid stock market dip, it is paramount that one checks the financials and applies a top-down trading method to improve the market timing.  Best stock market dips occur during a bullish trend especially in the third Elliott wave. 

That is all friends and foes.  I hope this article has been useful to you.  If yes, please share and bookmark it.  Also, do not forget to say few good words about us in your favourite trading or investing forums.

I wish you the very best.  Please stay tuned because I will be back soon with another eye popping stock market investing article.

Happy Investment To All.

This article is written by G Beaulieu
Founder Of Stochastic-macd