Trading A Dead Cat Bounce? ...same as catching a falling knife?

Handle123 said:
Unless you actually have a method called dead cat bounce, well tested, in my way of thinking, it be fool hardy. Risk is beyond too much.
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Often pump & dumps, I was testing out the last 12 months an algo for bounces and found the majority were traders throwing in large size then very shortly after pull it out again with price collapsing.
So to my cost discovered lots of large size rallies on small caps were fake due to fact small caps can easily be pushed around, large cap stocks behave different.
The odd time a small cap genuinely rallied, well often there was heavy buying right throughout the day.
 
themickey said:
Often pump & dumps, I was testing out the last 12 months an algo for bounces and found the majority were traders throwing in large size then very shortly after pull it out again with price collapsing.
So to my cost discovered lots of large size rallies on small caps were fake due to fact small caps can easily be pushed around, large cap stocks behave different.
The odd time a small cap genuinely rallied, well often there was heavy buying right throughout the day.
More...

https://www.elitetrader.com/et/thre...unce-same-as-catching-a-falling-knife.341332/

in the video above, is he gap trading a continuation move to the downside after the cat has hit the 'ground' reached an 'apex' around the gap 'resistance zone' and watching for an opportunity to rejoin if the trend resumes downward, allowing a reasonable r/r trade in his estimate.
agreed, without verification, no 'method' exists

https://www.elitetrader.com/et/threads/what-would-you-say-belongs-in-a-solid-trading-plan.340340/
mind the gap.jpg
 
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