Buy The Dip

Tradeeto introduces a new breed of AI-driven algorithms serving a specific sub-group of strategies: the Buy-The-Dips (BTD) family.

In general, Buy-The-Dip means purchasing an asset after it has dropped in price.

The belief here is that the new lower price represents a bargain as the "dip" is only a short-term blip and the asset, with time, is likely to bounce back and increase in value.

Buy-The-Dip is a common phrase investors and traders hear after an asset has declined in price in the short-term.

After an asset's price drops from a higher level, some traders and investors view this as an advantageous time to buy or add to an existing position.

But how large should the drop be in order to increase the chance of making a profit?

According to our ten-year experience on the financial markets trading derivatives, stocks, and bonds, the common answers to this question are deficient, incomplete, and lackluster at best:

• technical analysis relies on indicators and support levels that everybody can see, devoid of meaningful predictive powers, and unable to cope with extreme events. In short, it gives the illusion of drawing a shape around noise. True volumes are traded on dark pools and multilateral trading facilities: it’s no wonder you are a victim of visual illusions while trading on your charts;
• fundamental analysis is broadly covered by Wall Street analysts, and each stock’s target price and consensus are vastly known by every market participant – hence already discounted in the current market price. Moreover, even the best balance sheet due diligence is unarmed against extreme events like the Covid-19 pandemic burst;
• econometric analysis is harshly constrained by a set of unrealistic assumptions that will return useless maximum-likelihood estimates desperately seeking for an equilibrium on top of which bell-shaped statistical distributions are just a mirage. The financial markets are known to anticipate rather than follow big economic figures, like GDP, CPI, and central banks rates policies, while the quantitative models used to price derivatives when you are playing as market maker are nowhere near useful when it comes to trade with your own money.

The Algorithm

From the ashes of the above, we have leveraged a completely data driven and assumptions-free set of algorithms that have one single goal: to find the best possible entry points for buying the dips.

Those are rare moments when:

• panic sell-off has spread and the markets has just lost its fabled efficiency;
• Value-at-Risk thresholds of large funds are pierced and the portfolio managers are forced to sell even their beloved top picks;
• trend-following and breakout algorithms go berserk regardless of whether they are trading short-term Treasuries or Bitcoin;
• ordinary people's cognitive bias tells them that they should run for the hills and it’s too late to exit in an orderly fashion.

Those are the moments when you would really want to Buy-The-Dips, not others.

So whether you like trying a quick and dirty trade with a narrow take profit or accumulating assets like cryptocurrencies and stocks by following a custom averaging plan, Tradeeto can give you fresh and appealing entry points that no analysts, no website, no newsletter, no private chat, no other algorithm can show.

Provided that you want to Buy-The-Dips in a new and more effective way, of course.

Disclaimer

This is not a personal recommendation, nor an offer to buy or sell nor a solicitation to buy or sell any securities, investment products, or other financial instruments or services.

This material is shown for general informational and educational purposes only and is not intended to constitute legal, tax, accounting, or investment advice. The statements in this website shall not be considered as an objective or independent explanation of the matters.

Please note that this website (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and (b) is not subject to any prohibition on dealing ahead of the dissemination or publication of investment research.

Alerts, insights, and similar publications do not reflect any opinions of Tradeeto or its affiliates. All the contents of this website are meant for informational purposes only, are not intended to serve as a recommendation to buy or sell any security in a brokerage account or any platform, and are not an offer or sale of securities nor an endorsement or advertisement of the same.

While Tradeeto seeks to ensure the accuracy of the information it presents, it has no obligation and shall not be liable for errors in any data, or information accessible throughTradeeto products or services.

All investments involve risk and the past performance of a security or financial product does not guarantee future results or returns.

Tradeeto is not a broker-dealer nor an investment adviser, and makes no representations or warranties, express or implied, and disclaims any and all warranties with respect to any information accessible via any Tradeeto data.