Dip
A short-term drop in price, often viewed by buyers as a discount within a larger uptrend.
A dip is a modest pullback, not a crash. Traders who believe an asset is still trending up treat these pauses as entry points, hence the phrase 'buy the dip' and the acronym BTFD.
The risk is plain: a dip and the start of a real downtrend look identical at first. Buyers who keep averaging down into what turns out to be a bear market end up catching a falling knife. Whether a dip is a discount or a trap is only clear in hindsight.
Related terms
An acronym for 'buy the dip' (with an expletive), urging purchases when prices fall sharply.
Dollar-Cost Averaging (DCA)Investing a fixed amount on a regular schedule, regardless of price, to smooth out volatile entries over time.
Dead Cat BounceA short-lived rally inside a larger downtrend that fades fast and gives way to more selling.
Bull MarketA sustained period of rising prices, when buyers dominate and optimism pushes valuations higher across the market.