Falling Knife

The term falling knife refers to buying an asset whose price is falling rapidly and warns investors not to act hastily in case of sudden declines.

Falling knife is a term used for an asset whose price is falling rapidly and indicates to investors that they should be careful before investing in this asset. This term refers to situations where the price of the asset shows a sudden decrease. Investors should avoid hasty investments when faced with a risky situation such as a falling knife, thinking that a sudden price decline is at the end and the asset has the potential to decline further. Therefore, investors often wait to see the price stabilize and start rising again rather than trying to catch the falling knife.

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