What is a 'Falling Knife'?

A falling knife is a slang phrase that refers to a rapid drop in the price or value of a security. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Term of the Day | Words to Know Falling Knife A falling knife is a colloquial term for a rapid drop in the price or value of a security. The term is commonly used in phrases like, "don't try to catch a falling knife," which can be translated to mean, "wait for the price to bottom out before buying it." A falling knife can quickly rebound - in what's known as a whipsaw—or the security may lose all of its value, as in the case of a bankruptcy. Read More » Related to "Falling Knife" Buying Stocks When the Price Goes Down: A Mistake? Averaging down is a trumpeted strategy that has merit but can amount to throwing money away when used carelessly. Read More » The Art of Cutting Your Losses Taking corrective action before your losses worsen is always a good strategy. Find out how to keep your capital losses small and let your winners run. Read More » How to Adjust and Renew Your Portfolio Our complete guide to rebalancing your portfolio will make sure that you maintain your strategy and maximize your returns. Read More » SPONSORED BY INVESCO What is an Exchange-Traded Fund? An ETF is a basket of securities that may consist of stocks, bonds, commodities, or other financial assets. Invesco offers a deep dive into this versatile asset. Learn More » Related Definitions Momentum Momentum is the rate of acceleration of a security's price or volume. Momentum generally refers to the speed of movement and is usually defined as a rate. Read More » Downtrend A downtrend occurs when the price of an asset moves lower over a period of time. Discover more about what happens during a downtrend here. Read More » Volatility Volatility measures how much the price of a security, derivative, or index fluctuates. Read More » Whipsaw Whipsaw is a condition where a security's price is moving in one direction when it quickly changes and moves in the opposite direction. Read More » CONNECT WITH INVESTOPEDIA Email sent to: mondemand.forex@blogger.com To update your newsletter preferences or unsubscribe, click here. 114 West 41st St, floor 8 New York NY 10036 © 2020, Investopedia, LLC, All Rights Reserved | Privacy Policy