Newlead Holdings Ltd. (fka NEWLF)

[Rhee]

Interesting post. Catching a knife never works. That's why it's called a knife. Occasionally, you can catch a dead-cat bounce. But that is very risky and entails trading off a very short timeframe.

I'd say more often than not with trading, the trick is to simply be cognizant of the obvious:

1a. A stock that is going down will go down.
1b. A stock that is going up will go up.

2a. A stock that is going down will be sold on a bounce, not bought. So even if there is a lot of room for upward movement, in actuality people will get out at less of a loss on the bounce. I.e., never expect previous levels to be hit on a unilateral downtrend of a company without revenue during the course of its lifespan.
2b. A stock that is going up will be bought on a pullback. So buying lower on a stock going up is typically safe. However, buying low on a stock trending down is actually unsafe as the stock will go lower, and you never know how quickly the bounce - which feels violent - will be sold. You need to wait for a double-bottom, plus a higher low. Even then, you would expect selling at resistance.

Never confuse buying low on a stock going up with buying low on a stock going down. They are VERY different.