What Does It Mean to Buy the Dip or Sell the Blip in Trading?

[Ben Graham]

 

I Buy the Dip, Sell the Blip — What Does It Mean?

 

What Does It Mean to Buy the Dip or Sell the Blip in Trading?

Have you ever heard the phrase “buy the dip” or “sell the blip” and wondered what it really means?

While interpretations vary, the core idea is simple yet powerful: One side of the market is stronger, and that’s the side you want to trade with. Whether you’re a day trader or swing trader, this concept helps you enter with momentum after a temporary price pullback.

Let’s break it down.

 

What Does It Mean to Buy the Dip or Sell the Blip in Trading?

 

Understanding Market Momentum and Retracements

Markets move in waves, and a trend builds momentum by creating new highs in an uptrend or new lows in a downtrend. Traders often get caught chasing these moves too late, only to get stopped out during inevitable retracements.

That’s where buying the dip (in an uptrend) or selling the blip (in a downtrend) comes in. Instead of entering on strength, you wait for a temporary pullback that doesn’t violate the overall trend. This allows you to enter with better risk/reward and less competition.

Buy the dip: Enter long on a pullback in an uptrend.
Sell the blip: Enter short on a bounce in a downtrend.

Why Do Dips and Blips Happen?

Trends don’t move in straight lines. Here’s why temporary reversals, otherwise known as dips and blips, are common:and necessary to continue the trend.

1. Stop Hunts & Algos

In markets like forex, algos frequently push prices to run stops, both in retracements as well as above recent highs or below recent lows, especially intra-day. Once a retracement or pullback runs out of steam, algos will look to run stops above intra-day highs or lows given the opportunity/

2. Positioning Imbalances

When too many traders are long or short, the market becomes one-sided. A shakeout is needed to reduce this imbalance, flush out weak hands, and set up the next trend leg.

Key Rules for Buying the Dip or Selling the Blip

This isn’t about blindly entering every pullback. Here’s how to do it with a strategic edge:

Identify the Dominant Trend

Use moving averages, price structure, or momentum indicators to determine the direction of the prevailing trend. A simple and visual way is to use The Amazing Trader charting algo. When red liness dominate, it is an uptrend with momentum. When blue lines dominate, it is a downtrend with momentum.

EURUSD 4 HOUR CHART – TREND UP – RED LINES DOMINATING

 

EURUSD 5 MINUTE CHART – BLUE LINES DOMINATING =- RETRACEMENT

Wait for a Retracement That Doesn’t Break Key Levels

Look for pullbacks that stop short of support (uptrend) or resistance (downtrend) zones. Deep retracements can work on higher timeframes, but shallow dips or blips are preferred in day trading.

Confirm Shakeout Activity

Volume spikes, wicks, or fast reversals often signal that weak positions have been flushed, making way for a trend continuation.

The Psychology Behind the Strategy

A trend resumes when the market can no longer absorb buying or selling against the trend. Once weak longs or shorts are out of the way, there’s less resistance in the direction of the trend, creating the ideal opportunity for entries.

Pro tip: Weak positions provide liquidity by exiting early or getting squeezed out in a retracement. Once they’re gone, fresh momentum can build with less friction as a market has less ability to absorb fresh buying or selling with the trends there are fewer positions to take profit and provide liquidity.

Why Most Day Traders Use This Approach

Most retail traders are day traders, and this strategy caters perfectly to short-term setups. Intra-day dips and blips are often:

• Shallow but fast
• Driven by stop hunts or news spikes
• Followed by snapbacks in the trend direction

The key is to let the market show its hand and then ride the wave when the trend regains control.

Trade With the Strong Side

In trading, choosing the right side of the market is more than half the battle. “Buy the dip, sell the blip” is more than just a catchy phrase, it’s a disciplined, momentum-based trading strategy rooted in price action and market psychology.

Stick with the trend, avoid emotional entries, and look for retracements that set up low-risk, high-reward trades.

Buying a dip or selling a blip means entering on a pullback in the direction of a strong trendafter weak hands are flushed out. It’s a smart way to trade with momentum and improve your odds of success.

To learn more and master the markets 

Take a FREE Trial of The Amazing Trader – Click HERE

The post What Does It Mean to Buy the Dip or Sell the Blip in Trading? appeared first on Forex Trading Forum.