What does it mean when an investor says to buy the dip?
Definition: Buy the dip (BTD)
Buy the dip means to purchase an asset after it has dropped in price. The hope is that you purchase at a lower price and then the stock goes back up. An investor would profit from this trade.
Also referred to as “Buy the F***ing Dip” or BTFD.
Investors have been buying the dip since the invention of trading markets. Even your mom bought the dip when she picked up extra boxes of macaroni and cheese because they were on sale.
In the modern context the phrase became popular in online forums. Around the year 2010 there was an explosion of investment advice, urging others to “Buy the f***ing Dip” or BTFD. It has only increased in popularity during the retail trading revolution.
With basic math, it makes sense to purchase an asset when the price is lower. However, there are several risks involved. Buying the dip assumes that the share price will continue its upward trend.
Oftentimes the dip is mistaken for an actual pivot point in a share price. Several investors buy the dip only to watch in horror as the stock price continues to tumble downwards. A savvy investor, armed with due diligence, would know the difference between a dip and an actual downturn. They would be able to purchase an asset during the dip and watch the price rise.
However, many uninformed investors believe that any share dropping in price is a golden opportunity to get in at a good price and make some tendies. They typically give up on trading stocks after they blow up their account. Or need to take a pause while they add additional funds to their trading account.
If successful, lots of tendies have been made buying the dip, but a stock must be researched to achieve such results.
An investor that buys the dip must also sell the rip.
”Not only did I buy a ton of XYZ, but I got my family to do so too, BTFD!”
“Stay calm and BTFD”
“Just BTFD’d on the leading stock in the energy space.”