The strategy of catching a knife is one of the most risky, but also profitable strategies. Risks are associated not only with particularly high volatility, but also with technical risks. And what makes this strategy especially profitable is that when it is worked out, it turns out to catch a market reversal, getting increased profits by applying a scalping approach to entering a position and a positional approach to holding a position.
The article examines the mechanics of market behavior leading to large impulse movements, as well as gives TWO STRATEGIES for catching a knife when moving long and strategies when moving short.
For each strategy, the factors and grounds for making a decision to open a deal, methods and entry points into a position, bases and exit points from a stop loss position, methods and points for determining exit levels from a take profit position are given.