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Every trader has at least once found themselves in such a situation.

The coin drops by 15%.

Then another 20%.

Then another 30%.

And a thought appears in your head:

“There’s nowhere else to fall. It’s time to buy.”

Unfortunately, the market doesn’t know what we think is “the bottom”.

Many losses occur not because of an incorrect asset choice, but because of entering the position too early.

What is a “falling knife”?

In trading, a “falling knife” is what you call an asset that continues to rapidly lose price under pressure from sellers.

The main problem is that the asset looks cheap, but that doesn’t mean it has stopped falling at all.

A cheap price and low risk are not the same thing.

Why do beginners buy too early?

It all starts with psychology.

You can see that:

Bitcoin -10%

Ethereum -15%

Altcoin -35%

And the brain starts convincing you:

“If I don’t buy now, I’ll miss the bounce.”

Actually, it’s just a normal fear of missing out—something that in trading often costs a lot.

The main mistake is trying to guess the bottom

Many traders want to buy the asset exactly at the lowest point.

But the truth is that nobody knows where the absolute bottom is until it’s already behind us.

Professional traders usually don’t try to guess.

They wait for confirmation.

What should you pay attention to?

Before entering a position, it’s useful to wait for at least a few signs of stabilization:

✅ the decline is slowing down;

✅ sell volumes are decreasing;

✅ a support level is forming;

✅ buyers start actively buying up the offers;

✅ the market stops updating local lows.

Buying 5% higher after confirmation is often much safer than buying 20% cheaper during panic.

A simple example

Let’s imagine you have $1,000.

Scenario #1

The price drops from $100 to $80.

You buy the entire volume at $80.

But the market keeps falling to $60.

Result:

−25% loss almost immediately after entering.

Scenario #2

You wait.

The market forms a base.

Then the price returns to $84.

Yes, you bought it at a higher price.

But now there are signs that sellers are losing control of the situation.

Sometimes a slightly higher price means a significantly lower risk.

Averaging down isn’t always salvation

Another common mistake is endless averaging down.

Buying:

for $80

for $72

for $65

for $58

looks logical only until the moment the market keeps falling.

As a result, the trader spends all their capital before the asset finds its true bottom.

My rule

I never ask:

“How cheap is the asset right now?”

I ask:

“Has the market shown that sellers are losing control?”

These are two completely different approaches.

Conclusion

Nobody buys the bottom consistently.

And just like that, nobody sells consistently right at the very top.

Successful trading isn’t about guessing the perfect entry point.

It consists of risk management and capital protection.

Sometimes the best deal is the one you haven’t opened yet.

Disclaimer: This article is for educational purposes only and is not financial or investment advice. Each investor makes their own decisions, conducts their own analysis, and assesses risks before opening any positions.

P.S. While working on the Crypto Rewards & Bonus Finder project, I regularly analyze traders’ behavior, crypto exchange bonus programs, and typical user mistakes. These observations often become the basis for my materials on Binance Square. If you like my articles and you think the project

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